Doubts still overshadow HK's Cyberport
(China Business Weekly)
Updated: 2004-04-28 14:45

Two years since Cyberport opened, the development's executives say the HK$15.8-billion (US$2-billion) project has backed up style with substance.

But detractors charge it has yet to fulfil its goals. They allege it was simply a real estate venture dressed up as a bid to boost Hong Kong's burgeoning technology sector during the old dotcom boom.

Cyberport was launched in controversy.

Hong Kong's government awarded the project -- without tenders -- to a company controlled by Richard Li, a son of the territory's richest man, Li Ka-shing.

Critics argued the deal smacked of cronyism.

Land is scarce in congested Hong Kong, leading to some of the world's highest property prices, and Cyberport has gone up on a rare prime parcel on the island's south side.

The real estate side of Cyberport is shaping up nicely. A lavish opening for Cyberport's ultra-chic Le Meridien hotel was held on Tuesday.

Nearby, the park's luxurious Bel-Air residential properties are selling well. They are being marketed on the suggestion of a millionaire's lifestyle.

But critics have a question: What about Cyberport's original stated mission to brighten Hong Kong's future by bolstering its technology sector?

While US-based software giant Microsoft has moved in, only two-thirds of the office space is occupied. And there's more to be opened.

Cyberport's sidewalks still seem eerily empty. Especially considering the rental rates are a relative bargain at HK$11 to HK$13 (US$1.40 to US$1.70) per square foot, said real estate agent Kelvin Ho of Centraline Property Agents Ltd.

Corporate governance activist David Webb said the amount of Cyberport's acreage devoted to residential development made clear its nature as a real estate venture from the outset.

Cyberport Chief Executive Officer Nicholas Yang said on Tuesday time will prove the doubters wrong.

"If you ask for results in two to three years, that's a little shortsighted," Yang told reporters at the hotel's opening.

"Judging success by looking at the occupancy rate is a big mistake.

"Look at how long it took for Silicon Valley. Did people judge whether it was successful three years later?" he asked.

Cyberport spokeswoman Rennie Kan said the development was planned as a "community," including real estate, although technology remained the top priority.

Kan noted tenants are chosen to fit Cyberport's strategic focus on digital media technology.

Perceptions that the residential side is gaining ground faster than the tech development are inevitable because of the aggressive advertising needed for Hong Kong real estate marketing, she said.

"In the end, companies do have to come here and set up their offices," Kan said.

Controversy was sparked in 1999, as soon as the government awarded its development rights to Pacific Century CyberWorks, a tech-and-telecoms company controlled by Richard Li.

The firm is now known as PCCW.

PCCW was once envisioned as a regional powerhouse that would use its stable telephone revenues to fund potentially lucrative high-tech ventures. But the plan fizzled amid the dotcom bust.

Now, critics say their suspicions about Cyberport are underscored by PCCW's plans to transfer the assets to a small gas company, whose focus is being shifted to real estate.

PCCW spokeswoman Joan Wagner declined comment about the spinoff.

Although Bel-Air residential sales of HK$4.11 billion (US$527 million) last year helped PCCW's revenues grow 12 per cent, the company still posted a net loss of HK$6.1 billion (US$782 million).

Critics say Cyberport doesn't fit with Hong Kong's attempts to reshape itself as a value-added economy -- which many agree must come from entrepreneurial initiative, not the government.

"Hong Kong's strength is not government-engineered new industries," said economist Dong Tao, with investment bank Credit Suisse First Boston.

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