LCQ17: Redevelopment Project at Hanoi Road in Tsim Sha Tsui Following is a question by the Hon Lee Wing-tat and a written reply by the Secretary for Development, Mrs Carrie Lam, in the Legislative Council today (April 14):
Regarding the sale of the flats in the redevelopment project at Hanoi Road in Tsim Sha Tsui, which was jointly undertaken by the Urban Renewal Authority (URA) and a private developer, will the Government inform this Council:
(a) whether it knows the detailed arrangements of the internal sale conducted before the sale of the units of the aforesaid redevelopment project in the open market (including how the decision on which flats were to be put up for internal sale was made and how their prices were set); whether URA has discussed and agreed with the project developer a list of specially-selected buyers; if it has, what the criteria and restrictions were, including whether buyers were prohibited from selling their flats by way of "confirmor sale" (i.e. after signing the formal agreement for sale and purchase with the original property owner, the buyer passes the interests in the agreement to another buyer before the specified date of transaction); whether it has prohibited staff and family members of the project developer and other partners from purchasing flats in their own name or in the names of companies through internal sale, or they were required to obtain the written authorisation concerned to participate in internal sale; if they were so required, of the details; when and why URA has agreed to the internal sale arrangements for the aforesaid redevelopment project, as well as the number of flats involved; when the project developer submitted the list of specially-selected buyers to URA, the number of persons involved, and the total number of persons who actually made purchases in the internal sale, when the provisional and formal agreements for sale and purchase were signed, and when the transactions were completed;
(b) whether it knows if URA has taken the initiative to publicise detailed arrangements for the internal sale of the aforesaid redevelopment project, and replied to the enquiry on the internal sale arrangements from the Apple Daily on 26 August last year; if so, of the details; if not, the reasons for that;
(c) given that it was reported that quite a number of tycoons indicated that after purchasing flats of the aforesaid redevelopment project through internal sale, they immediately resold the flats by way of "confirmor sale", whether it knows if URA has followed up the resale situation of such kind of flats;
(d) given that it was reported that the adjoining flats on the 60th floor of the aforesaid redevelopment project were sold by applications from individual buyers on invitation, whether it knows the relevant details; in what way the other adjoining and duplex flats in the project were sold and its details;
(e) whether it knows when and in what way in the project developer publicised the prices of the first batch of flats in the aforesaid redevelopment project put up for sale in the open market, and when the sale in the open market officially commenced; the respective numbers of flats put up for sale on the first and second days of the official sale; the total number of flats sold in this way and, among them, the number of those the buyers of which are affiliated with the project partners (such as purchases made in their own name or in the names of companies by the board members, relatives and senior management staff of the partners, etc.), and whether such purchases were executed through the estate agencies under the project developer; whether the authorities will investigate the incident;
(f) whether it knows the total number of flats in the aforesaid redevelopment project sold to date and, among them, the respective numbers and percentages of those sold through sale in the open market and not through sale in the open market (such as internal sale and applications from individual buyers on invitation, etc.); and the respective numbers of flats purchased in the names of companies and persons;
(g) in order to avoid estate agencies under the partners of other future redevelopment projects (i.e. estate agents responsible for the sale of the flats of the project) from having priority in purchasing the first batch of flats put up for sale in the open market, so as to generate profits and boost sales, whether it knows if URA will consider adopting the method of drawing lots to decide on the buyers to purchase the first batch of flats for sale in the open market;
(h) whether it knows if URA will consider expeditiously publicising on the web sites of other future redevelopment projects detailed information of the sales brochures, prices of flats, as well as daily and aggregate numbers of flats sold, and updating records of agreements for sale and purchase daily, with a view to enhancing transparency; and
(i) according to the information in the sales brochure of the aforesaid redevelopment project, dedicated areas of a total of 736.358 square metres (m2) are zoned as public pedestrian walkway, the management, operation, repair and maintenance of which will be the responsibilities of property owners, whether it knows such estimated annual expenditure; how the property owners share such expenses; whether 608.03 m2 inside the dedicated areas as defined under the Deed of Dedication can only be used for public pedestrian passage, and not for other purposes (such as letting out for temporary hawking activities, etc.); whether property owners are required to shoulder the management and repair and maintenance costs of the open space for the public, public passage, tunnel connections and accesses as well as public passage and pedestrian subway connections leading to MTR stations within the project area?
(a) The development project referred to in the question is "The Masterpiece", which is the service apartment portion of the "K11 Owner Participation Scheme" launched by the former Land Development Corporation (LDC) in 1998. The LDC and the former property interest owners (including the current project developer) had respectively entered into commercial contracts under the "Owner Participation Scheme" (OPS) to take the project forward.
The Urban Renewal Authority (URA) took over the project upon its establishment in 2001. The developer and its related companies held over 80% share of the property rights.
According to the contract terms of the OPS, the developer is fully responsible for the sales arrangement of the units. While the URA is vested with the power to consider and approve the price list and the terms of payment of the units proposed by the developer, it has no authority to interfere in the sales plan, marketing programme, the sales procedure, including internal pre-sale and identifying target customers. To ensure that the prices of units are in line with the market level, the URA has appointed two independent professional valuers to examine the proposed price lists submitted by the developer.
Since the developer had already obtained the Certificate of Compliance from the Lands Department (LandsD) before "The Masterpiece" was put on sale, the developer was not restricted by the LandsD Consent Scheme.
As regards the sales arrangement for the other URA projects, based on the consensus reached between the URA and its joint-venture partners under the respective project development contract, normally there will not be any internal pre-sale of units. In the various projects launched by the URA in recent years, such as Florient Rise in Tai Kok Tsui and Island Crest in Sai Ying Pun, internal pre-sale has not been arranged. Regarding the proposed price lists, the URA will employ independent and professional valuers to examine the proposed price lists submitted by developers to ensure that the prices are in line with the market level.
Unlike the other development projects, under the terms of the "K11 OPS" contract with the developer, the URA can only ask the developer to produce for URA's record a full list of the buyers who purchase units through internal pre-sale, and the records of vetting by the developer’s board of directors. The URA has been informed by the developer in writing that none of its directors, staff members or their family members are on the internal pre-sale buyers' list. As all the contracts relating to the rights and responsibility governing the sale of "The Masterpiece" were finalised before its establishment, the URA could only consider the proposed price lists submitted by the developer and refer them to two independent international valuers for professional and objective advice in compliance with the contracts. In this regard, URA had asked the developer several times to revise the price lists before the project was put on sale so as to ensure that the prices truly reflect the market prices and that the URA’s interests in the project would be protected.
There is no contractual or other legal basis for the URA to require the developer to seek its prior approval on any internal pre-sale arrangement including the list of invited buyers, or restrict buyers from selling their units through any lawful means of transaction before the specified transaction dates.
All the 39 persons/companies on the internal pre-sale list submitted by the developer to the URA had signed the provisional and formal agreements for sale and purchase by the end of August 2009 as scheduled. The Deeds of Assignment for all the 39 sold units were completed within the deadlines as specified in the formal agreements for sale and purchase and registered with the Land Registry.
(b) The developer takes full charge of the flat sale for "The Masterpiece" under the provisions of the project contract. The flat prices were also set in accordance with the price lists approved by the URA. The URA has no right to interfere in any internal pre-sale arranged by the developer. There is also no provision in the project contract that gives the URA the right to make public the internal pre-sale arrangements.
(c) The developer takes full charge of the flat sale for "The Masterpiece" under the provisions of the project contract. There is no contractual or other legal basis for the URA to require the developer to seek its prior approval for any internal pre-sale arrangement or restrict buyers from selling their units through any lawful means of transaction before the specified transaction dates, such as selling their units by way of "confirmor sale".
(d) It is the understanding of the URA that the adjoining units on the 60th floor have been put up for sale by way of "invitation for open offers" through the four estate agencies appointed by the developer. The purpose of this arrangement is to identify more interested parties to make offers through the estate agencies. The URA agreed to the final price level proposed for the adjoining units. The transaction of the units was also fully executed and registered with the Land Registry. The developer is offering the remaining standard units and special/duplex units for sale by batch in the open market and through the appointed estate agencies.
(e) "The Masterpiece" went on sale in the open market in end-August 2009. The total number of units, including the first batch and the additional units, put up for public sale on the first two days, was 130. A total of 77 units were sold on those two days. A Certificate of Compliance from the LandsD was obtained beforehand and the units were put up for sale as completed flats. Nevertheless, the developer has, in accordance with the practice agreed between the Real Estate Developers Association of Hong Kong and the Government in respect of the sale of uncompleted first-hand residential units, published the price lists before the sale of the units concerned. This includes distributing the price lists to estate agencies entrusted to help with the sale to facilitate their identification of interested buyers. Besides, all the price lists have been posted at the sales office before the flat sale. Visitors to the sales office can obtain the price lists and the sales brochures free of charge.
There is no requirement in the "OPS" agreement between the former LDC and the developer that at the stage of public sale of the units, buyers must disclose their identities to the URA or seek approval from the URA. As such, the URA does not have information on the relationship between the buyers and its project partner.
(f) "The Masterpiece" provides a total of 345 standard units and special/duplex units. So far, a total of 243 units have been sold, including 239 standard units and 4 special units. Of these, 204 units (200 standard units and 4 special units) were sold during public sale, representing about 59% of the total number of units in the project, while 39 standard units were sold during internal pre-sale, representing about 10% of the total number of units. At present, the developer is offering the remaining 102 units (or 30%) for sale by batch in the open market. According to the information available from the sale and purchase agreements, of the 243 units sold, 82 were purchased in the name of individuals while 161 were under company names.
(g) All along, for the URA and its joint-venture partners, when it comes to the sale of units under their development projects, it has been common practice for the developers to appoint a number of estate agencies to put up the flats for sale in the open market. The URA has confirmed that in the process, no estate agencies will have the priority to purchase the first batch of flats or other flats put up for public sale for profit or to help boost sales. The URA will discuss with the Finance Committee of the URA Board by the end of April whether it will stipulate in future development contracts with partners that internal pre-sale will be abolished and whether the declaration procedure governing the purchase of units by the partner developers and related persons during public sale should be tightened.
(h) According to the standard cooperation arrangement between the URA and its partner developers, the sale of flats is the developers' responsibility. As required under the guidelines on flat sale issued by the Real Estate Developers Association of Hong Kong, the developers have to make public in their sales offices and their websites the transaction details of uncompleted first-hand residential units, including in each case the transaction price, the date of signing of the formal agreement for sale and purchase, and the particulars of the transacted flat, within five working days after the signing of the provisional agreement for sale and purchase. Sales brochures are made available in the sales offices to the visiting public and estate agents free of charge. As to whether the price lists and the transaction details will be made public on the URA’s website as soon as possible, it should be noted that given the time lapse in the actual promulgation of the information, this may give rise to unnecessary confusion. Nevertheless, the URA will examine the feasibility of the proposal.
(i) In accordance with the Deed of Mutual Covenant for "K11" as approved by the Government, the area of 736.358 square metres (m2) designated as public pedestrian passages at the ground level comprises two sections measuring 608.03 m2 and 128.058 m2. They are public areas in the development project and have to be open for public use free of charge. The estimated annual expenditure on management, operation, repair and maintenance of these areas is about HK$1 million. All owners of the development project will have to bear the management responsibility, including the repair and maintenance expenses, of these two sections of pedestrian passages based on their management shares as stated in the Deed of Mutual Covenant.
Furthermore, the related expenses on the public open space, the subway connections, the subway exit and entrance, the MTR public passageway and the MTR subway connection within the project area, are all shouldered by the owners of the K11 Shopping Arcade in accordance with the proportion of management shares they hold as prescribed in the Deed of Mutual Covenant. As required under the lease conditions, these areas should be open to the public free of charge.
The lease conditions also stipulate that the public pedestrian passages, the public open space, the subway connections, the subway exit and entrance, the MTR public passageway and the MTR subway connection mentioned above should all be open to the public free of charge, and generally should not be used for any other purposes.
Ends/Wednesday, April 14, 2010
Issued at HKT 16:49