XN000022-1981-04-09 — Page 3

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THURSDAY, APRIL 9, 1981

THE DEPRECIATION OF THE EXCHANGE VALUE OF THE HONG KONG DOLLAR DURING 1980 OF NEARLY FIVE PER CENT, HE SAID, DOES NOT APPEAR YET TO HAVE EXERTED ANY SIGNIFICANT EFFECT ON THE RATE OF INCREASE IN PRICES OVER AND ABOVE THAT ARISING FROM WORLD INFLATION.

IN THE PROPERTY MARKET, SIR PHILIP SAID, SUPPLY RESPONSES HAVE BEEN PARTICULARLY NOTICEABLE IN THE CASE OF NON-RESIDENTIAL ACCOMMODATION.

THERE WAS AN INCREASE IN THE SUPPLY OF NEW SHOP SPACE OF 38 PER CENT IN 1980, COMPARED WITH 1979- IN THE CASE OF OFFICES THERE WAS AN INCREASE OF 66 PER CENT BUT, IN THE CASE OF FLATTÉD FACTORIES, THERE WAS A DECREASE OF 24 PER CENT, ALTHOUGH THE STOCK OF VACANT SPACE REMAINED HIGH.

THE RAPID INCREASE IN 1980 IN THE SUPPLY OF NEW SHOP AND OFFICE SPACE HAS BEEN ACCOMPANIED BY FAIRLY RAPID RATES OF INCREASE IN PRICES AND RENTALS, BUT IT IS CLEAR THAT THE GROWTH RATE OF SUPPLY CAUGHT UP WITH THAT OF DEMAND BY THE END OF THE YEAR, HE SAID.

ABOUT 65 PER CENT OF THE SUPPLY OF NEW SHOP SPACE IN 1980 WAS COMPLETED IN THE SECOND HALF OF THE YEAR AND 40 PER CENT IN THE FOURTH QUARTER- AND ABOUT 86 PER CENT OF THE SUPPLY OF NEW OFFICE SPACE IN 1980 WAS COMPLETED IN THE SECOND HALF OF THE YEAR AND 52 PER CENT IN THE FOURTH QUARTER.

+THIS SUPPLY RESPONSE WILL PERSIST FOR SOME TIME YET AND, GIVEN THAT THE PRESENT LEVEL OF INTEREST RATES WILL MAKE IT VERY EXPENSIVE FOR LANDLORDS TO 'WAREHOUSE THE IR PREMISES, A DAMPENING EFFECT ON ASKING PRICES AND RENTALS SHOULD SOON BECOME APPARENT, + HE SAID.

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SIR JACK SPEAKS ON BRITAIN'S RELATIONS WITH HONG KONG

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THE CHIEF SECRETARY, THE HON SIR JACK CATER, TODAY (THURSDAY) SPOKE ABOUT THE RELATIONSHIP BETWEEN HONG KONG AND BRITAIN, DRAWING A CLEAR DISTINCTION BETWEEN THE EXPEDIENT AND THE FUNDAMENTAL.

+WE SHOULD BE DOING OURSELVES A GREAT DISSERVICE IF WE WERE TO CALL OUR RELATIONSHIP WITH BRITAIN INTO QUESTION BY RELATING TO IT ISSUES WHICH, HOWEVER IMPORTANT, HOWEVER SERIOUS, ARE NEVERTHELESS NOT FUNDAMENTAL QUESTIONS ABOUT THE RESPONSIBILITIES OF BRITAIN FOR HONG KONG, HE SAID.

SPEAKING IN THE RESUMED BUDGET DEBATE, SIR JACK REFERRED TO THE TIMELY, STATESMAN-LIKE COMMENTARY BY THE HON ALEX WU WHO HAD EXHORTED US NOT TO CONFUSE THE EXPEDIENT WITH THE FUNDAMENTAL.

MR WU HAD SAID IN PART, +WHAT BRITAIN DOES ABOUT EXPENDITURE ON EDUCATION, HOW BRITAIN BEHAVES IN TRADE NEGOTIATION, EVEN HOW BRITAIN ARRANGES HER NATIONALITY AND IMMIGRATION AFFAIRS, CANNOT BE LUMPED TOGETHER AS EVIDENCE OF A FUNDAMENTAL CHANGE IN THE RELATIONSHIP BETWEEN BRITAIN AND HONG KONG.

/+THERE IS