NICHOLAS BROOKE, FRICS, FHKIS

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Managing Expectations The changes and
challenges facing the industry A property
professionals perspective

• NICHOLAS BROOKE, FRICS, FHKIS
• PRESIDENT, RICS

NOVEMBER 2003
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GLOBAL BACKCLOTH
The Economic Backcloth and the Health of the
Sector
The Changing Landscape of the Urban Economy
Issues Relating to Ownership, Occupation and
Investment
Conclusion
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THE ECONOMIC BACKCLOTH AND THE HEALTH OF THE
SECTOR
Global uncertainty terrorism, natural disasters
Weak occupational market
Strong investor sentiment
Disconnect between occupational demand and
investment appetite
Growing significance of REITS and other
investment vehicles
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THE CHANGING LANDSCAPE OF THE URBAN ENVIRONMENT
Reshaping of cities
Inflexibility of existing supply
Future of CBD
City commitment to the attraction of major space
users.
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ISSUES RELATING TO OWNERSHIP, INVESTMENT AND
OCCUPATION
Continued outsourcing of ownership
Realisation as to the real costs of ownership
Growth in investor community
Emphasis on the total accommodation offer
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CONCLUSION
Longer cycles
Less volatility
More certainty
But perhaps less exciting
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KOREA THE STAR PUPIL IN THE CLASS
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MALAYSIA A SURPRISING PERFORMANCE DRIVEN BY A
CANNY LEADER
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SINGAPORE A CITY STATE UNDER SIEGE
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HONG KONG RISING TO THE CHALLENGE
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Economic Transformation
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KEY INGREDIENTS OF A WORLD CLASS CITY

• Diversity

Education
Employment
Quality of life
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REALITY

• A city undergoing transformation from enclave
• to hub of metropolitan region.

Third major economic transformation well in hand.
1950s Manufacturing economy, with back towards
China.
1970s Export/Import with China as backyard
platform.
1997 onwards Inward facing hub managing flows
of goods, services, people and money.
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GENERAL BACKGROUND

• Handover/transfer of responsibility remarkably
  smooth.

One country/two systems proving successful
experiment.
Hong Kong community developing sense of ownership.
Move away from dependence on real estate.
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ECONOMIC SITUATION

• Hong Kong affected by global downturn.

Minimal growth 2002, 2003 also likely to be
difficult year.
Major concern is job security.
Impacting on consumer sentiment, home purchase.
Budget Deficit HK70 billion and growing.
Compounded by impact of SARS.
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MATURING HONG KONG

• Change of mindset.

Sense of ownership and belonging.
HK no longer a transit camp.
Quality of life high on the agenda.
Sustainable development not just a question of
lip service.
Consultation now the norm.
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HONG KONGS RESPONSE TOTHE CHALLENGE
Repositioning as process manager rather than
just middleman.
Taking advantage of Hong Kongs pivotal location
to create regional logistics hub.
Tourism and infrastructure key areas of
investment.
Adding to menu Science Park, Cyberport, Disney.
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ECONOMIC INTEGRATION WITHTHE MAINLAND
At Macro Level
Creation of economic partnership arrangement.
Acceleration of WTO commitments.
Enhancement of Hong Kongs role as enabler.
Alignment of objectives and major initiatives.
Capitalising on the one country dimension,
without diluting the two countries concept.
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DEVELOPING HINTERLAND
Guangdong Province huge engine of growth. -
86 million people - Equivalent in size to
Thailand
Made in the Pearl River Delta.
Strength of combined offer-
Services support, marketing and key management
- Hong Kong
Production, manufacturing, warehousing. -
Guangdong
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The Pearl River Delta Region
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The Pearl River Delta comparisonwith regional
neighbours
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THE HONG KONG PARTNERSHIP MODEL

• Three Principal Directions-

Contracting out/outsourcing of service provision
- E.g. Sewage treatment, waste
management, hospital support services, property
and facilities management.
PFI Initiatives - Risk best allocated to party
best equipped to manage it. - Public sector
should not be owner of assets but a purchaser of
services.
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THE HONG KONG PARTNERSHIP MODEL CONT.

• Public Private Partnerships
• - Projects of strategic importance where both
  public and private involvement is essential to
  successful outcome.

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Cyberport
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Cyberport
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SkyCity Artist Impression
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Hong Kong Science Park
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Hong Kong Science Park
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Hong Kong Science Park
BIOTECH
ELECTRONICS
IT
PRECISION ENGINEERING
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URBAN REGENERATION
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Aerial View S.E. Kowloon
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S.E. Kowloon The Existing Platform
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S.E. Kowloon Zoning Plan Proposals
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S.W.Kowloon During Reclamation Phase
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S.W. Kowloon Aerial View
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S.W. Kowloon The Winning Design Concept
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S.W. Kowloon The Winning Design Concept
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worldwide
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