Buyer Beware
An allegedly bungled Mid-Levels development brings new meaning to the word “icon"
| Text : Elizabeth Kerr | Photo : www.thinkstockphotos.com |
Not even a month into the New Year and the first property scandal has arrived. With prices touching all time highs, land for new development at a premium and seemingly everyone and their dog looking for the next sure investment thing, Hong Kong’s property industry is ripe for another controversy.
At press time the latest development saw Winfoong International offering to buy back its flats at The Icon on Conduit Road at a 10 percent premium after news broke that the units — purchased in the range of $10 million — were handed over to owners unfinished and not to the expected specifications. Winfoong is not a member of the Real Estate Developers Association, and as such is not subject to its business and transparency standards. As if that wasn’t bad enough, owners didn’t get the right paperwork, and it was revealed that as a “redevelopment” and not a new build, the project is exempted from the Lands Department’s standard consent regulations. And the final blow was that the property’s marketing agents and sales representative, Centaline, might have known there would be shortcuts. Oh my.
The scandal seems to hinge on the promised open kitchens in the units. It’s alleged buyers were expecting open kitchens, but by the same token, the Buildings Department is specific about permits being issued for those kinds of changes upon occupancy, as Mary Ma reported in The Standard. Centaline’s boss claimed purchasers were well informed that units would be handed over incomplete and finished later on.
The Icon-gate is turning into a case of he said/she said in an environment where an overheated property market is spurring buyers to snap decisions. Government can make all the attempts it wants to cool the market down, but aspiring locals and eager foreign investors are part of the cocktail that bottom-line loving developers can’t resist. Is it any wonder, really, that this kind of fiasco finally erupted? It makes Henderson Land’s supposed fudging of its sales figures last year seem like child’s play by comparison.
At this stage of the game, angry buyers that feel deceived have pooh-poohed the buyback offer by Winfoong, and are demanding current market value for their flats. In a statement released by the Civic Party’s Tanya Chan on behalf of purchasers, they said, “We find the 110 percent buyback offer proposed by the developer to be unreasonable … We suggest the developer should refer to the market value of the lot when making a buyback offer, and to make public the relevant information.” To some that would seem illogical. If you return a dress that was bought on sale, no store will credit the full price of the garment. How buyers can expect more than what they paid is curious, but as The Icon is located in a prime Mid-Levels neighbourhood and are sized for luxury rental, it’s not really surprising buyers that may have been hoping to cash in on the booming rental market are looking to reap the returns they expected.
Who’s to blame? That decision is currently in the hands of the Buildings Department as it tries to sort through all the sordid details, but the finger-pointing and accusations are likely to continue for some time. Will it lead to more regulation by the government? Possibly (a committee to discuss the matter has already been convened), but if there’s one thing the SAR hates it’s strangling development and any rules that act as disincentives.
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