Henderson Land Under Fire
On Tuesday, blue-chip property developer Henderson Land said that all but four of the 24 luxury condominiums it had sold last October for record prices at its 39 Conduit Road project were canceled by the buyers. The company, which is controlled by billionaire Lee Shau-kee, booked a loss of 734 million Hong Kong dollars (US$94.2 million) from the cancellations.
Bonnie Ngan, a spokeswoman for Henderson Land, said Wednesday that the cancellations were "very standard" in the industry, and that "there was nothing un-transparent about what happened." Ms. Ngan said the company had pocketed these buyers' initial deposits and would put the condominiums back on the market. Of course the deposits were forfeited, but the question is the magnitude of the cancellations, 20 out of 24 sales???
The ramifications could be broader for the industry, as the government vows to crack down on developers' sales practices amid fears of a property bubble and anger at the city's powerful developers. On the same day that Henderson Land announced the sky-high sale prices at 39 Conduit Road last October, Hong Kong Chief Executive Donald Tsang was delivering a policy address vowing to tamp down property prices.
After Henderson Land announced its sales, home prices jumped in the upscale Mid-Levels District where 39 Conduit Road sits. Some analysts said the announced sales had a knock-on effect on sentiment in the broader property market, putting further upward pressure on prices in a city where mass-market apartment prices soared about 30% last year.
After the 39 Conduit Road sale, Hong Kong's government began requiring developers to make transaction information available to the public five days after an initial sales contract is signed. It has also introduced measures, guidelines and requirements that it says has enhanced the transparency of home sales and protected consumer rights.The news was all the more significant because it was the same 39 Conduit Road which saw the most expensive apartment transacted a few months back. Yes, it was Henderson Land again. The 39 Conduit Road sales generated attention in part because of Henderson Land's claim that it sold one 6,158-square-foot unit for a record US$56.6 million which set a world record price of HK$88,000 ($11,300) per square foot.
Now there are claims that the record sale was actually cushioned by giving the buyer deeper discounts on other purchases of Henderson Land's developments. The unit, which was marketed as sitting on the 68th floor of the building, was actually just on the 44th floor. I guess thats what happens when you take out all the 4's and the entire 40th-49th floors as well, but then doesn't 68th floor then sound like a "trick" when you are nowhere near 68 storeys high. Maybe fengshui is not that unreliable after all, as the 68th floor in actual fact is the real 44th floor, a real fengshui no-no.
I guess the key factor in all this was the fact that most, if not all of the 20 buyers who defaulted sent in their default notices through the same one lawyer firm - interesting. Of course why would Henderson Land create such an artificial buying support only to pull out en masse, as any sane person would know that that would trigger massive ill-will and negative publicity?
Home prices in Hong Kong have risen 5.7 percent this year, adding to 2009’s 29 percent advance and raising concerns the market is overheating. Hong Kong builders often sell apartments before they are completed, drawing in customers by showing models of the homes.