• News

2012-10-21

Developers Want Maximised Profits Citizens Want Affordable Homes

The Long Beach 4 Blocks not yet Open for Sale
Construction Completed 6 years Ago
Imperial Cullinan Original Land Bought $6,000sq ft Sold at $15,000sq ft
Developers Want Maximised Profits Citizens Want Affordable Homes
Solution: Large Supply of Flats from Home Ownership Scheme

In 2007, Green Sense, together with many residents of Tai Kok Tsui, opposed rigorously the construction of walled buildings in the coastal side of West Kowloon. We have even applied for judicial review of the decision of the land sale. 5 years passed, unfortunately, more and more walled buildings have been constructed in West Kowloon. The worst of all, these buildings end up either unsold for ages, or as luxurious flats for Mainlanders and the rich locals.

Roy Tam, President of Green Sense, sighed, ‘In those days, we, together with District Council members of Tai Kok Tsui and residents, tried so hard to prevent the construction of walled buildings. Now, the once controversial land was turned into walled buildings. Sadly, over 1,000 units are not occupied at all and render the construction meaningless to the public.’ He continued and said, ‘It does not necessarily mean much to the general public even if developers are willing to sell the completed flats. In order to maximise their profits, developers target mainly the Mainland purchasers and sell the flats at $15,000 per square feet. How can an ordinary middle class afford such flats?’

The Long Beach, developed by Hang Lung Properties, was completed in 2006. 600 flats out of 1829 flats were sold in 2007. However, only until 2012 was there another sale of 100 units. It is estimated that over 1,000 units have not been open for sale. There has not been a single sale in four of its blocks (Block 1, 2, 7 and 9). Currently, Conditions for Sale and land leases stipulates only the required completion date, but not the date for sale.

Imperial Cullinan, developed by Sun Hung Kai Properties at Hoi Fan Road, provides another example of the current problem of Hong Kong property market. It is located on the land where it was once remarked as ‘the last breezeway of Tai Kok Tsui’, and was the subject of the above mentioned judicial review 5 years ago. The developer acquired the land at $55.6 billion, in other words, $6,066 per sq. ft. However, it is eventually open for sale in 2011 at $15,000 per sq. ft in average. It was the time when the influx of the Mainland property purchasers started to come. The average price per flats of Imperial Cullinan was about $21.4m, with a sales amount exceeding $135 billion.

Roy Tam claims, ‘if developers are allowed to utilise the land freely, the only thing they will do is to maximise profits. It is silly to think that they may serve ‘bread’. What they will serve is only ‘high class cakes’. They concern not the residential needs of the ordinary middle class. The Reach, half hour walking distance from the Yuen Long MTR Station, will soon open for sale and it will be expensive too. The first 100 flats, not only are they priced expensively at $7,200 per sq. ft., but also are “inflated flats”. The building plan of these flats was submitted a bit in advance of the governmental regulation on inflated buildings taken effect on 1st APR 2011.

While we struggle hard to have an affordable housing, developers pursuit only maximised profits. The housing problem faced by our middle class would not be addressed effectively if the government attempts to bring down the price by simply increasing the supply of private developments. Green Sense proposes, in order to effectively cool down the property market and benefit people with real need of housing, the government should increase the supply of flats from Home Ownership Scheme and Private Sector Participation Scheme. Roy Tam also remarked that there would be much uncertainty if large amount of land were sold and developed freely. ‘We do not know how much a flat costs. We also do not know if those flats are in fact sold to Hong Kong residents.’ Roy Tam said.

Information of Imperial Cullinan

Developer: Sun Hung Kai Properties
Price of the Land: $55.6 billion
Contractual Price per Square Feet: $6,066
Date of the Land Sold: JUN 2007
Amount of Flats: 650         Amount of Flats Green Sense studied: 632

	Mainlanders	Joint buyers of Mainlanders and Hongkongers	Hongkongers	Companies	Other Nationality	Without Names / Insufficient Information	Amount of Flats Studied	Percentage of Flats Owned & Co-owned by Mainlanders
Imperial Cullinan	167	0	136	284	11	34	632	26.40%

Purchasers from the Mainland : Local Purchasers = 55.1% : 44.9%
(Purchases under a company name not included)
Sale Profits (632 Flats): $135.27 billion
Average Price per Square Feet: about $15,000
Average Price per Flat: $21.4 million

Examples: Construction Completed Years Ago
                           But   1) Not Yet Open for Sale    or    2) Some Flats Remain Unsold

Name	Developer	Development Scale	Current Condition	Possible Reasons for the delay
The Long Beach	Hang Lung Properties	8 blocks with 1829 flats	It is estimated that about 1,000 flats, mostly from block 1, 2, 7, 9, have not yet sold. Construction was completed in 2006. Its units were put up for sale as completed flats in 2007. 600 flats were then sold. Only till MAY 2012 there was another sale of 100 flats.	Difficult to understand why it was open for sale only half a year ago, while construction was completed 4 years ago.
The Habourside	Hang Lung Properties	3 blocks with 1122 flats	Around 250 flats have not yet been sold, while its completion was in 2004.	Difficult to speculate
Individual house development in Ma Sik Road, Ma Shi Po, Fanling	New World Development	17 blocks of 3 storeys individual houses	Not yet open for sale and not even furnished. Completion however was in 2006.	Await the new development in North East New Territories, in order to increase plot ratio
Shining Heights	Henderson Land Development	1 block with 356 flats	About 30 flats remain unsold. Construction was completed in 2009.	The price offered is high. Not hurry for sale.
The Hermitage	Sino Group	6 blocks with 964 flats	There was a pre sale for uncompleted flats in 2010. Construction was completed in 2011. Currently about 160 flats remain unsold.	As developers usually retains some remaining flats.

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