More transparency on developers' sales tactics needed
(HONG KONG) The government should regulate Hong Kong developers' sales tactics to increase transparency, a lawmaker said yesterday, as the territory's Parliament held a special session on the collapse of HK$2.67 billion (S$474.89 million) of apartment sales by Henderson Land Development Co.
The Parliament held the meeting, which Henderson declined to attend, to discuss the 20 luxury apartment sales that fell through, prompting legislators' calls for the government to investigate the transactions.
The government increased its scrutiny of developers after Henderson said in October that it sold an apartment at 39 Conduit Road in the Mid-Levels district on Hong Kong Island for a record HK$88,000 a square foot.
'What's happening is a failure of existing regulations,' Wong Kwok-hing, chairman of the Legislative Council's Housing Committee, said at the meeting to discuss the collapsed sales.
Henderson said in a press release its appearance in yesterday's meeting would be 'inappropriate' because it has 'sufficiently disclosed' details on the transactions and an investigation is still under way.
The government, which is trying to curb a 38 per cent surge in home prices since the beginning of 2009, introduced in June nine rules on new home sales, including the use of show flats developers use to entice buyers before a building is completed. Those measures have no statutory power and are rules the Real Estate Developers Association 'advise' its members to follow, Mr Wong said.
Hong Kong's government has sought details from Henderson, controlled by billionaire Lee Shau-kee, on the sale agreements after 20 of the 24 sales at 39 Conduit Road were cancelled.
Henderson has repeatedly denied any wrongdoing in the way it handled the transactions. Yesterday it said in a statement published in the South China Morning Post that 'the company strongly rejects' allegations that there have been irregularities in the sale of the apartments.
The government has submitted all the letters exchanged between Henderson and the Lands Department to the Legislative Council (Legco), Permanent Secretary for Transport and Housing Duncan Pescod told lawmakers yesterday. He and other government officials attending the meeting declined to comment on the investigations into the collapsed sales.
Hong Kong police and other law enforcement agencies are investigating the sales at 39 Conduit Road, Transport and Housing Secretary Eva Cheng told lawmakers during a July 5 Legco session. Ms Cheng declined to specify the other agencies and give a schedule for the investigation.
The lawmakers will meet again to discuss the sales, Mr Wong said, without giving a date. The meeting was attended by officials from the government's Lands Department and Housing Authority.
'Setting up legislations to regulate apartment sales would be unnecessary,' said Patrick Chow, head of research at property agency Ricacorp Ltd in Hong Kong. 'All we need is more clearly defined rules.'
Henderson shares rose 0.6 per cent to HK$47.50 at the close of trading in Hong Kong. -- Bloomberg
Source: Business Times, 13 Jul 2010