Only 7 Sites “Genuine Housing Supply”

Even Less if Marketed as Luxurious Developments

22 Sites “Bogus Housing Supply”

Low Density Development or above HK$9000 per sq. ft.

60:40 Public Private Split of Housing Supply Non-scientific

Should Consider the Housing Policy of Singapore

“Bogus Housing Supply”? The Secretary for Development, Mr. Paul Chan, announced the new Land Sale Programme at the end of February, comprising 29 residential sites allegedly capable of providing about 16,000 flats. However, the devil is always in the details. How many of them are affordable flats?

Green Sense has analysed all sites in the latest Land Sale Programme and compared them with the recent and neighbouring second-hand property transactions. In our analysis, “Genuine Housing Supply” (i.e. affordable by the general public) and “Bogus Housing Supply” (i.e. Hard to afford or luxurious property) are differentiated by the following criteria: 1) whether the purchase price of a flat is HK$9,000 or above per square feet (saleable area); and 2) whether it is a low density development. Based on the analysis, we have estimated the purchase price of the flats of these 29 residential sites.

The research result reveals that only 7 out of 29 sites may have the purchase price of flats below HK$9,000 per square feet (saleable area). The price, at the end of the day, depends on whether or not the developers decide to package these sites as luxurious developments. The remaining 22 sites are mainly either of low density developments or likely to have flats priced at more than HK$9,000 per square feet (saleable area), which are unlikely to be affordable by the general public. We are of the opinion that these 22 sites are “Bogus Housing Supply”.

On one hand, the Government always alleges there is lack of land. On the other hand, it wastes so much land for developments which are unaffordable for the general public. The governmental policy for the public-private ratio of housing supply as 60:40 is not scientific. In fact, the Land Sale Programme is the main source for supply of housing for the general public. The Government should consider designating some of the sites in the Land Sale Programme for the Home Ownership Scheme, after taken into account the surrounding facilities and transportation. We suggest designating part of the site of Hong Kong Science & Technology Parks (Pak Shek Kok) as development under the Home Ownership Scheme, turning “Bogus Housing Supply” into “Genuine Housing Supply”.

There has been serious tension among the Government and the community and green groups because of the rezoning of Green Belt sites and Open Space. The Government should be focus on genuine housing supply but not casually dismiss or criticise the views of the local communities and the green groups. If there is no genuine housing supply after the rezoning, the sacrifice (including the ecology, the environment and the local culture) will be made for nothing. We sincerely hope that the Government will plan for affordable genuine housing supply, but not simply blames the members of the local communities or the green groups for its housing policy failure.

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

The Long Beach at night. Construction was completed in 2006. However, only four out of eight blocks have been open for sale. Picture shows many flats are dark at night.

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.

The extravagant lobbies and clubhouses of Imperial Cullinan. Most of its flats are sold at $15,000 per sq. ft. The average price per flat is around $21.4m.

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

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