Ming Wei Real Estate Investments

From the SCMP
by Mark O'Neill
Apr 11, 2008

Here your apartment costs a tenth of that in Hong Kong and one-fifth
of that in Macau," said property agent Zhang Huangyuan. "Since they
announced the building of the bridge, we have not had one day off."

Mr Zhang sells properties in Huafa Century City, a development of
800,000 square metres, seven minutes' drive from the spot where the
Hong Kong-Zhuhai-Macau Bridge will arrive in Zhuhai . "The apartments
in this phase cost 10,000 to 11,000 yuan (HK$11,140 to HK$12,250) per
square metre and we have sold over 90 per cent of them. The buyers are
local and from Hong Kong and Macau," he said.

In Zhuhai, developers and property agents are jumping for joy over the
planned 42 billion yuan bridge linking the city with Hong Kong and
Macau. They see it as the best way to sustain for years a boom that
drove sales of commercial property up 130 per cent last year.

Also delighted is the city government, which first proposed the bridge
in 1983, although it no more has the money to pay for it now than it
did then. It sees the bridge as the final piece of a jigsaw to link
the city by rail and road to the rest of China.

Ordinary people are ambivalent, as the project promises to bring
growth and prosperity but also to push the prices of homes, already
too high for them, to a level they will never be able to afford. Only
a few publicly oppose the bridge as a white elephant that will never
cover its costs and need government subsidies far into the future.

"The social and political significance of the bridge far outweigh its
economic value," said Zheng Tianxiang, a professor of economics at the
Pearl River Research Centre of Zhongshan University.

The bridge was first proposed in 1983 by Liang Guangda, the father of
modern Zhuhai as mayor and party chief from that year until 1998.
Popularly known as Liang Dapao (Big Gun Liang), he built Zhuhai's
enormous airport and Formula One race track, both of which have lost
money since they opened and saddled the city with heavy debt.

In the early 1990s, Zhuhai built a 1.5km bridge to an island named
Qiao, which it intended to be the first leg of the bridge to Hong
Kong. But, because the Hong Kong government did not agree, the bridge
was never extended.

Beijing, Guangzhou and Hong Kong could never agree on a bridge until
the appointment of Wang Yang as party chief of Guangdong last year.
Always reticent, Guangdong was conducting feasibility studies on its
impact on the environment and water flows in the Pearl River that were
not due to be finished until the end of this year. But under Mr Wang,
it suddenly became supportive.

On February 28, Hong Kong, Guangdong and Macau announced an agreement
to pay 50.2 per cent, 35.1 per cent and 14.7 per cent of the project's
costs respectively. The three governments committed themselves to
paying subsidies, at a level unannounced, to cover costs.

The bridge will be the final part of a transport system that will give
Zhuhai a competitive edge over other cities, its mayor, Zhong Shijian,
told members of the city's people's congress on March 26.

"Zhuhai has a land area of only 1,700 square kilometres, but will have
an airport, port, railway, light rail, four expressways and the bridge
to Hong Kong," he said. "Nowhere will be able to match our transport
network."

His vision for Zhuhai is similar to that of Mr Liang two decades ago -
a green city that pays its way through universities, tourism, retirees
and a good quality of life, with industry mainly limited to
biotechnology, IT and other hi-tech sectors.

"We do not want to be like Dongguan and other cities in the Pearl
River Delta. We do not want processing industry. We want green GDP
more than development GDP," Mr Zhong said.

A deputy to the city's Chinese People's Political Consultative
Conference has proposed making Zhuhai the first low-carbon-emission
city on the mainland.

The city of 1.5 million people had a GDP last year of 88.7 billion
yuan, an increase of 16.5 per cent over 2006, with services accounting
for nearly 50 per cent.

But the transport network Mr Zhong spoke of is not yet in place. The
light rail to Guangzhou will not be completed until the end of 2009
and the railway, also to Guangzhou, not until 2011.

"People say that ours is the only deep-water port in China without a
railway and ours the only large-scale airport in China without an
expressway," said party chief Gan Lin on a tour of transport projects
last month. "Our great advantage is our proximity to Hong Kong and
Macau. The building of the bridge will make us a centre linking these
two and Guangdong province."

Zhuhai has benefited greatly from its proximity to Macau: visitors can
walk from the city to the gambling enclave through a border post that
is open 18 hours a day and whose capacity is being expanded from
150,000 to 350,000 people daily. The city has applied for it to be
open 24 hours a day.

Many tourists stay and eat in Zhuhai and only cross into Macau for the
gambling. That has made Gongbei, next to the border, the busiest and
most expensive district in Zhuhai, full of hotels, massage parlours
and nightclubs. New Mercedes-Benz and Lexuses share Gongbei's streets
with pimps and pickpockets.

Thousands of Macau residents have bought homes in Zhuhai because they
are so much cheaper than those in their home city. Of homes on sale in
124 residential projects in the city last year, 14 per cent were
bought by Macau residents. They are not the only buyers. The low
prices and the city's pleasant environment have attracted buyers from
Hong Kong, Guangzhou and Shenzhen, as well as overseas Chinese.

Investment in real estate last year totalled 13 billion yuan, an
increase of 99 per cent on 2006, with sales of commercial property of
20.57 billion yuan, an increase of 130 per cent, according to official
figures. That pushed the average price of commercial residential
property in December to 5,829 yuan per square metre, up 17.2 per cent
from a year earlier, with the price in Xiangzhou, the city centre,
rising 66 per cent, to 9,206 yuan. Many outside owners visit Zhuhai
infrequently, leaving their homes empty for most of the year.

Prices have risen further on news of the building of the bridge and
are expected to increase at least 15 per cent this year.

"For ordinary people like me, the bridge is a mixed blessing," said
Huang Xiujun, an assistant in a bookshop. "We earn 3,000 yuan a month.
After we pay for food, telephone, transport, rent and what we give our
parents, there is about 1,000 yuan left. We cannot afford an apartment
now and will be even less able to once the bridge is built, with all
the new buyers.

"For the city as a whole, the bridge is good. It will bring more
visitors and capital. Hong Kong investors will have an alternative to
Shenzhen, when they can get here in 30 minutes. It will be bad for the
environment but you cannot refuse development. Can you eat good air?"

"I support the bridge," said Wang Jian, from Henan province , one of
thousands of manual workers attracted to Zhuhai who works irregularly.
"Zhuhai is far behind Shenzhen, Dongguan and Zhongshan . It has too
few factories and not enough work. The government is too selective in
the factories it permits. The bridge will bring more industry and more
jobs."

Professor Zheng is among the few who publicly question the wisdom of
building the bridge: they say there will not be sufficient traffic to
pay for its enormous cost, with boats providing a cheap and efficient
alternative to the road. "The bridge will require a subsidy from the
three governments for years to come. How much is this subsidy going to
be?" he asked.

Cheng Jiansan, head of the economic research centre at the Academy of
Social Sciences of Guangdong province, said that in an era of market
economy, it was regrettable that a big project required such a large
subsidy from the three governments.

The government of Zhuhai will pay little of the subsidy. The excesses
of the Liang years, especially the airport, have left it with large
debts.

An official in the city government said Guangdong had not yet
discussed the level of contributions to be made by the different
jurisdictions in the province. But the bulk of Guangdong's
contribution is likely to come from the coffers of the provincial
government.

Now the battle is on to secure the benefits of the bridge. The three
cities are competing to attract the people and goods it will carry.
Zhuhai is full of landscaped property sites, with gardens, swimming
pools and golf courses aimed at Hong Kong and Macau buyers.

The city is investing heavily in its Gaolan port, which is 15.2 metres
deep. It is building a second phase with two 50,000-tonne container
berths and a capacity of 800,000 containers a year, and planning a
third with four terminals with 100,000-tonne container berths.

It aims to be the biggest container terminal in the western Pearl
River Delta, with annual container capacity of 2.3 million teus
(20-foot equivalent units) by 2011 and the port of choice, rather than
Hong Kong, for exporters to Europe and North America. And it aims to
reap the profit - and not hold the debt - from the pharaonic project
that the bridge will be.