Tung Kok Tau in Shenzhen

The Group holds 49% interests in a joint venture, which holds a piece of land located in Tung Kok Tau, Nanshan District, Shenzhen. The joint venture has ceased business operations since the expiry of its operation period in January 2014.

The Group is currently developing a plot of land no. K709-0003 located in Tung Kok Tau, Nanshan District, Shenzhen (the “Land”), which was granted to the Group by 深圳市規劃和自然資源局南山管理局 (Nanshan Administration of Shenzhen Municipal Bureau of Planning and Natural Resources) (the “Bureau”) in the last period.

The Land is primely located to the east of 後海大道 (Hou Hai Avenue), to the south of 蛇口新街 (Shekou New Street), to the north of 望海路 (Wang Hai Road) and to the west of 後海濱路 (Hou Hai Bin Road), which has a site area of approximately 65,000 square metres for multi-purpose development, with developable gross floor area of approximately 179,000 square metres (including 143,000 square metres for residential use and 29,000 square metres for commercial use and other supporting ancillary facilities).

The Group began development of the Land and had been working closely with various relevant government authorities and parties on different development options and master planning of the Land with the city planning and infrastructure (including development of metro line and station) for cultural and leisure facilities in the region and the opera house nearby.

As for the JV known as Shenzhen Zhen Wah Harbour Enterprises Ltd. (“Zhen Wah”, in which the Company holds 49% of equity interests with the expiry of its license period in 2014), the Group and the JV partner (the “JV Partner”) continued its liquidation after withdrawal of compulsory liquidation by the Shenzhen Intermediate People’s Court of Guangdong Province (the “Court”) and the land swap that surrendered its interests in a piece of land located in Tung Kok Tau, Nanshan District, Shenzhen (the “Previous Land”) to the Bureau in return for, among others, the Land distributed to the Group. After such land swap, in which the primary asset of Zhen Wah was exchanged, Zhen Wah no longer possesses a significant asset.

The share of profit of the JV was nil (2023: RMB11,543,284,000 (equivalent to HK$12,635,773,000), which was primarily arisen from the initial recognition of one-off fair value gain of a piece of land distributed to the Group by the JV).

Meanwhile, as previously disclosed, an ex-tenant lodged appeals (the “Appeals”) for the previous judgements of the Court on four administrative proceedings submitted by it as plaintiff against the relevant official authorities (the “Authorities”) as defendants regarding the Previous Land and joining Zhen Wah as a third party. The ex-tenant opposed the relocation compensation agreement (the “Compensation Agreement”) made between the Authorities and Zhen Wah in 2021 for demolition, relocation and compensation of those buildings, erections and equipment on the Previous Land; and claiming for compensation. In the period, the Court dismissed three out of four Appeals and upheld their original judgments, and for the remaining Appeal, the Court modified the second ruling of its original judgment to order the Authorities to deal with and handle the ex-tenant’s compensation request again, and upheld other parts of the original judgment. The Group and the JV Partner is monitoring the progress and will take appropriate actions as and when necessary, based on the advice of its PRC legal adviser.

Based on the PRC legal advice received by the Group regarding historical disputes over Zhen Wah between the Group and JV Partner, including the change of equity interests from 80% to 49% in Zhen Wah in prior years (the “Historical Disputes”), the Group was entitled to the distribution of profit arising from the relevant income from the Previous Land held by Zhen Wah before re-development, as supported in the arbitral award made in 2010 after arbitration between the Group and JV Partner in respect of the Historical Disputes. The Group continued to act and to seek PRC legal advice and to take expedient actions (including but not limited to litigation and/or arbitration) to safeguard the best interest of the Group in Zhen Wah and its assets in respect of the Historical Disputes.

The metropolis Shenzhen, being the Shenzhen Demonstration Pilot Zone and high-tech hub, is expected to sustain diverse growth with high-quality development, fueled by recent positive policy and expansion of transportation network, bustling economic vitality and positioning as an international trade, innovation and consumption center and highly livable city. It will strengthen its core and pivotal role in the development of Guangdong-Hong Kong-Macao Greater Bay Area.

In addition, the recovery momentum of property market in Shenzhen is expected to grow, as signaled by record high price of land auction, and driven by a surge in sales recently, reflecting improved confidence to property market after unveiling a series of official supportive policies to combat prolonged property slowdown. This will enhance the development value of the Land in Tung Kok Tau, Nanshan District, Shenzhen.

And the Group will continue to utilise the city and master planning of the Land with the projects of adjacent opera house and infrastructure for a synergy effect. Meanwhile, it is expected that there will be substantial construction and development costs to be incurred by the Group in connection with the development of the Land in the future. In addition, the Group will continue to seek PRC legal advice and to further strive for the best interest of the Group in relation to Zhen Wah and its assets in respect of Historical Disputes.

Further details can refer to the interim report of the Company for the six months ended 31 December 2024.