The URA gets tough on fairness
Mainland China is making efforts to clamp down on property prices
| Text : Elizabeth Kerr | Photo : www.thinkstockphotos.com |
In May, Hong Kong’s Urban Renewal Authority (URA) announced it would be implementing controls designed to increase access among the general public to new joint-venture projects and provide greater price transparency. In a statement, URA Chair Barry Cheung Chun-yuen explained, “These additional measures are introduced by URA with a view to enhancing fair play of its property sales, facilitating opportunity to the end-users, tightening representation by its joint venture partners [and] ensuring disclosure and transparency of transacted sales.”
The eight measures included minimising internal sales to the developer’s staff and officers of the marketing organisation; individual buyers would be allowed to purchase only one unit and no more than 10 percent of the available units would be sold to buyers linked to the developer; officers and executives of the developer were required to make full disclosure of any purchase to the URA; and the developer is now required to publicly disclose sale prices, a record of all units sold and all sales involving any of the developer’s officers and executives as early as 24 hours in advance.
When announcing the plans, Cheung also went on to say, “We hope to implement these measures with our joint venture partners so as to enhance our flat sale mechanism.” The comment was referring to developers the URA regularly partners with in construction projects. Currently, marketing and sales of joint venture flats is handled by the developer, and the URA has been accused in the past of not doing enough to ensure the public has as much access to publicly funded projects as the directors on the boards of the partner companies. The URA also monitors prices in order to minimise speculation and keep prices steady. But as Century 21 Hong Kong Ltd. CEO Tony Chan sees it, the measures had more to do with price information than accessibility and bringing the URA up to general standards vis-à-vis flat sales. “I would call the measure a concerted effort by the URA to [demand] similar requirements from their partners in URA projects. The aim is to enhance transparency… and safeguard the interests of consumers,” Chan states.
Even if the number of flats available were to go up, the early price disclosures will be the biggest boon to buyers. “What [developers] had been doing was introducing the prices for only a few units. Traditionally, you show interest, put in a cheque, sign a form. And then you’re invited to wait — for hours — then into a little cubicle. You sit down and the sales staff gives you a few units and verbally tells you the price and asks if you’d like to ‘seize this opportunity.’. You’re given limited choice, late at night … it’s not fair play for anyone. Now [developers] can’t do this,” Chan clarifies.
How developers feel about the measures remains to be seen. A few days after the URA’s announcement, a government land sale in Tung Chung was greeted with underwhelming enthusiasm and many took it as a sign the developers were voicing their displeasure. But as Chan points out, the Tung Chung location was on reclaimed land where laying foundations is expensive, the Lantau site means toll fees every time a transport goes through and workers usually come from other districts. Taken together those factors drive up construction costs. It’s fundamentally not that strong a location and that had more to do with the slow sale. “I don’t think developers colluded to act in a way that told the government they were angered. But I understand them because all these new measure seem to be acting against them.”
As far as the big picture goes, all this means very little to consumers in general. “The measures are housekeeping,” Chan believes. “They’re tightening up what joint-venture partners can do with sales, enhancing transparencies and restricting internal sales. From the consumer’s point of view these are fair. I don’t think it will affect the market at all.”
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