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1. More public housing land sought

2. Developers shift tactics in buying old buildings

1. More public housing land sought
Winnie Chong, The Standard 11 October 2006

Land supply for public rental housing should be given higher priority in government policy, a brainstorming session by members of the Housing Authority has heard.

The call follows members' growing concern that it has become harder than ever for the authority to overcome district politics amid opposition to the government releasing suitable sites to the authority. Besides land supply, Tuesday's closed-door session reviewed other issues, such as potential conflicts of interest arising from members' professions.

Last month Yuen Long District Council opposed the authority's plans to build public housing estates in the district, saying they needed the land for recreational and community use.

Virginia Ip Chiu-ping, chief secretary of the Hong Kong People's Council on Housing Policy, said some people were just being selfish by opposing the construction of public housing estates in their districts because public housing is perceived as inferior and therefore a threat to property prices.

Ip urged the government to review its land policy.

"We respect district councils. But since the immigration policy remains unchanged, with about half of the migrants from the mainland requiring public housing, the government should give higher priority to land supply to the authority, so as to meet the demand for public housing, " she said.

Ip hoped the government would not ignore the authority's plea for more land. At present, there are about 100,000 applicants on the waiting list for public housing flats.

Wong Kwun, chairman of the Federation of Public Housing Estates, agreed that the authority has faced many constraints in land use in recent years, but said the authority should reveal its land reserves by year's end.

2. Developers shift tactics in buying old buildings
YVONNE LIU , SCMP 11 October 2006


Developers have adopted a strategy of talking to individual
owners in the acquisition of old buildings. Photo: SCMP

Owners of flats in old buildings who expect to gain a windfall from collective sales of their properties to developers by tender will be disappointed by some developers' latest strategy in acquiring old units for redevelopment.

Even though collective sale is a short cut for developers to gain 100 per cent ownership of old buildings for redevelopment, they have opted to buy units from individual flat owners, property consultants say.

Such a move will take a lot of time but can help developers save on costs.

Willis Mak Tse-hing, a director of investment at Colliers International, estimated that developers can save 20 per cent of acquisition costs through this strategy, compared with joining tenders in collective sales.

Individual owners putting up their flats for collective sale ask for a tender reserve price usually more than what developers want to pay, Mr Mak said.

After the successful sale of Fortune Villa in late 2004, many individual owners of flats in old buildings in Kowloon Tong and Seymour Road at Mid-Levels were planning to sell their properties by tender.

However, collective sales of most old buildings such as Moonbeam Terrace in Kowloon Tong and 25 Robinson Road in Mid-Levels have failed as developers' offers did not meet the owners' aggressive asking prices.

Thus, developers have begun to adopt a "one by one" strategy in acquiring old buildings, said Mr Mak.

"Developers would buy units in old buildings one by one or buy majority units from local investors," he said.

For instance, a developer has acquired 20 per cent ownership of 27 to 29 Seymour Road through its shell company, Excel Free, since last year.

The developer has also bought units of 25A and 33 to 35 Seymour Road , forcing flat owners at 27 to 29 Seymour Road to give up their plan for a collective sale.

Property agents believe the developer is Swire Properties, as it owns the site at the junction of Seymour Road and Castle Road .

Sources said that the developer has slowed down its property acquisitions after gaining 20 per cent ownership of target properties.

"It's the developers' strategy," Mr Mak said.

A collective sale works only when the owners of usually more than 80 per cent of units in a strata-titled building have agreed to sell. This is so because the buyer can call for a compulsory sale according to the 90 per cent statutory threshold for such a sale.

"Some developers would slow down or even stop their acquisition process after they have bought 20 per cent ownership to prevent the remaining owners from asking for aggressive prices," Mr Mak said.

"The remaining flat owners therefore have to cut their asking prices to attract developers."

This kind of acquisition usually takes 10 years to complete.

For example, Swire Properties had taken more than 10 years to complete the acquisition of Sai Wan Terrace in Quarry Bay using this strategy, which blocks individual flat owners from organising collective sales or other developers from coming in.

Only major developers can adopt this strategy as it takes longer and entails bigger interest costs. Mid-tier players have turned to buying from local investors.

Emperor Investment, the property arm of Emperor Group, has gained more than 90 per cent ownership of properties at 9A-H Seymour Road and Ying Fai Mansion through this strategy.

Elwyn Chan, general manager of Emperor Investment, said: "Many flat owners worry about the market response to their tenders. They would rather sell their units directly to developers.

"We also bought majority units in old buildings from local investors who began to acquire the properties before 1997."

He said the company will continue to adopt this strategy in acquiring development sites.

Many investors such as Franco Yeung have bought majority units in old buildings since 1997, acquiring more actively since the property market rebounded.