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The most expensive residential tower in Hong Kong history remains empty years after its completion
Hong Kong may have an iconic skyline and a spectacular if rapidly diminishing harbor. But it has torn down enough of its distinguished old buildings to make IM Pei’s externally dramatic Bank of China and Norman Foster’s internally dramatic Hong Kong & Shanghai Bank now its iconic buildings.
But here is another iconic building, one which sums up so much of the darker side of Hong Kong -- of greed, opaque government, flexible planning rules, mystery billionaires, uncounted (and unaccountable?) wealth, family feuds and more than just a hint of some very dark deeds.
That is the unnamed building occupying Rural Building Lot 1132, otherwise known as 129 Repulse Bay Road.. It sits on the green, scenic and up-market south side of Hong Kong island and with a glorious view of the self-same bay and beach yet just 20 minutes from the central business district.
It is indeed a dramatic construction, its 24 floors (28 minus 4, 13, 14, 24 excluded to satisfy the superstitious)curving outward at the top on the form of a lily, an unusual design intended to maximize not just its views but the restrictions on the developable site area.. At night it is lit with twinkling lights that make it the most conspicuous building outside Hong Kong’s urban area. Masterpiece or misplaced airport control tower, love it or hate it, you cannot miss it.
But nothing else is clear about this building – not even who designed it. When first announced, it was ballyhooed as the work of the world-renowned Norman Foster, architect of Hong Kong Chek Lap Kok airport as well as of the HSBC building. This attribution has continued to be spread informally, apparently at the instigation of the developer, and appeared as recently as 2004 in a publication of the HK Institute of Surveyors, a professional body which should know such things.
But Foster himself appears to make no such claims. It is not mentioned on his firm’s website nor was it included in the exhibition of his work at the British Museum. In official Hong Kong documents the buildings is ascribed to Arthur C.S. Kwok and Associates.
But that is a minor mystery compared with other aspects of this remarkable development.
The site first came to public attention in August 1997 when, then occupied by a block of 80 apartments which had housed British military officers, it was sold at auction for an incredible HK$5.55 billion (US$711 million). This was not only easily a record for a Hong Kong residential site given an accommodation value of some HK$16,000 per square foot or roughly double that then prevailing in this district. The price was all the more remarkable given that it was achieved after the handover and after Asian stock and property markets had begun to crumble following the Thai crisis in June 1997. The buyer was Chinachem, a large but private property developer which has always been something of a mystery.
Site formation and construction took four and half years and another HK$2.5 billion so that by the time it was granted an occupation permit in March 2003 it had cost some HK$8 billion, excluding interest and opportunity cost which would add another HK$1 billion or so. Yet now, in November 2006, almost four years and another HK$1 billion of opportunity cost later the building remains un-let and un-sold.
What is going on?
According to some reports, Chinachem at first tried to sell the 184 apartments for a then-staggering HK$30,000 per square foot – a sum which might have given the group a reasonable profit, but one which would still be below the norm for Hong Kong’s developers, given the astronomical costs.
But whatever Chinachem actually did or wanted to do then soon changed. In 2004 it quietly applied to the government to convert the building into a hotel. This seemed at best a curious decision given that demand for such a large and necessarily very deluxe hotel outside of Central was dubious. And the cost of converting the building might easily add another $500 million to direct costs and several more years delay.
The application should anyway have been immediately ruled out by the government. Under the Outline Zoning Plan which is supposed to regulate land use, the site was in area designated exclusively for residential development.
But Hong Kong’s Planning and Lands departments, which come under the Housing, Planning and Lands Bureau, are very much a law unto themselves as far as the public is concerned, a situation which gives rise to many rumors of sleaze when decisions are made in favor of developers which are considered contrary to announced general principles. Hong Kong has a much vaunted Independent Commission Against Corruption, but it has generally been far more effective in tackling small-scale payoffs to policeman and mid-rank civil servants than investigating issues involving really big money.
Officially, the public still knows nothing about Chinachem’s hotel application. This is another “secret” supposedly to protect the confidentiality of private business but clearly used to enable civil servants to do secret deals which cannot be underdone because the public knows about them too late.
Unofficially however, Asia Sentinel has learned from concerned civil servants that the application for change of use to a hotel was approved and Chinachem would be free to go ahead but for the fact that the government is insisting on the payment of a premium for conversion from residential to commercial use. The size of the requested premium is yet another secret, though it ought to be a matter of public knowledge given that it is an item of revenue and of concern to other developers. In any event, Chinachem is disputing it.
Meanwhile the building sits empty, a testament to the wealth of the Chinachem group and its owners. There is a mortgage on it, to Hang Seng bank. Originally a HK$1.6 billion facility, as of March 2005 only HK$868 million was outstanding, a modest amount relative to a total cost to Chinachem which must now be around HK$10 billion.
But perhaps the biggest mystery of all is how the fate of this building relates to the extraordinary story of the multi-year battle for control of Chinachem itself, and a feud which is not entirely concluded.
Chinachem had been controlled by one Teddy Wang, a Shanghainese whose rise to vast, property-based wealth was always shrouded in a degree of mystery. In 1983 he was kidnapped and his wife Nina Wang Kung Yu-sum paid a HK$80 million ransom for his release. In 1990 he was kidnapped again. This time he disappeared and Nina took over the company. No body was ever found but in 1999 Teddy was declared dead, opening the way for a battle of the wills between Nina and her aged father in law Wang Din-shin, now 94.
The elder Wang produced a 1968 will giving all Teddy’s estate to him. She produced a 1990 one, dated a month before his disappearance, giving it all to her. After a 192-day court battle in 2002, during which Din-shin accused Nina of adultery, the 1990 will was deemed a forgery and the father was awarded Teddy’s estate of around US$130 million. She was later charged with forgery. However, in 2005 the Court of Final Appeal reversed the 2002 judgment, declared the 1990 will valid and awarded all the estate to Nina and most of the costs of the long case. The forgery charge was then dropped.
That might have seemed the end of an unseemly battle. But not a bit of it. A case was then brought by Nina to uncover who had loaned Din-shin the money to pursue the probate case against Nina. Whoever did may face a demand for payment of the estimated HK$560 million in costs awarded against Din-shin. The court has ordered the nonagenarian to reveal all. He promises to go to jail rather than reveal his sources.
Whatever the result of these proceedings they indicate a degree of hostility that may reflect issues and persons beyond simply those of Nina and her estranged father-in-law. Who would have benefited had Din-shin been successful? Do clues to Teddy’s disappearance lie somewhere in all this mess?
Do the court battles also partly explain the fate of the building? Nina was in control of Chinachem at the start of the project but the octogenarian Din-shin would have nominally been in charge between mid-2004 and September 2005. But maybe all along decision relating to this building were in the hands of the group’s low-profile managers.
But even Nina Wang, now again dubbed Asia’s richest woman, must care about a HK$10 billion investment. After all, Teddy’s estate was only valued at around HK$1 billion and even if that has now grown fourfold it is still a small part of the total value of the Repulse Bay project, plus the score of other buildings Chinachem owns around Hong Kong.
So who owns the rest? The banks? Or interests which prefer to remain nameless?
The diminutive Nina, who usually dresses to look less than half her 69 years, gets plenty of attention in Hong Kong’s celebrity-obsessed media. But rather curiously there is a notable lack of coverage of what may really lie behind the battle for Chinachem – although often-contradictory rumors are plentiful. Maybe the journalists are too young to remember the roots of the wealth and the feud. Or maybe they sense that given the history of the Wangs discretion is the better part of valor.
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Economics/Business 
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