TNAG-2962-FCO40-4241-Future-of-Hong-Kong-British-Consulate-General-building-incl-1993 — Page 145

17-SEP-1993 17:08

OED CROYDON

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7

RE

HUD 406/2

2 2 SEP 1993

1 September 1993

C

INUE

Mrs D Barnes Jones

Hong Kong Department WH 312

081 686,4951

F.02

file.

86

Reference...

Mr Wootton RFD OAB 2/119 Mr Davey CRD OAB G/38

NEW BC-G HONG KONG: BRITISH COUNCIL RUNNING COSTS

1. Stephen Whittle and I undertook at last week's meeting to provide probable rents, and running costs that may be applicable to the British Council's accommodation within the new BC-G building.

2. A “market” service charge on comparable property in Hong Kong would be about 4.25 HK$/sq.ft/mth. made up as 3.22$ for general outgoings plus 1.03$ for inflation, future major maintenance and the property company's profit. This is the figure Swire Properties charge on One Pacific Place and they have provided a useful breakdown of how this is calculated (copy attached - Annex 1). The Council will occupy a gross area of 66,114 sq.ft. (6,142sq.m) and, based on the 4.25$/sq.ft./mth charge their estimated service charge will therefore be £286,963 (R/E 11.75$ to £1). Omitted from Annex A are charges for window cleaning, individual electricity and water consumption (as opposed to communal areas) and ground rent. Our estimated costs for these for the British Council are :-

3.

Window cleaning Electricity and water

Ground rent

£25,000 p.a.

£145,000 p.a. We understand

that this is B.C.'s estimate and caters for their extended use of the premises. £51,060

Based on the above figures the overall total running costs could be estimated at £508,023. In our view this is likely to be the maximum as some of the elements in Annex A may not be applicable eg share of estate expenses, insurance, promotion and profit element. We have not included costs for landscaping against the Council as it will be difficult to charge them for this since we do not envisage them having daily access to the garden area. However you will appreciate that all the above figures are based on assumptions and approximations.

4. The British Council's own estimate of annual running costs is £793,980 (Romesh Gunesekera's letter of 10 September to Mr Magor CRD is relevant). Their figures are also based on Swire Properties figures but they have added 1.50 HK$/sq.ft/mth (for air conditioning) to the base figure and £60,360 for additional ancillary staff. In our view both these elements are already adequately covered in the Annex A base figures and need not be covered further: we have recently spoken to Swire who have confirmed the latter. If these elements are now omitted the B.C.