Property developers in Hong Kong will have to comply with a new tighter set of rules governing the way uncompleted apartments are marketed and sold in the city.
The rules, which will take effect at the end of November, are aimed at improving transparency in the retail property market. As flat prices have soared in recent months, there were concerns that misleading sales tactics used by property developers contributed to the price surge.
In particular, in one instance, local property developer Henderson Land said in October that it had set a global record by selling an apartment for HK$88,000 per square foot. The unit in question was advertised as being located on the 68th floor, when the building was only 46 floors high. It is common practice for developers to skip floors which had numbers that were considered inauspicious in Chinese culture. In this case, Henderson omitted the floor numbers 13, 14, 24, 34, 40 to 59, 62, 64, 65, 67, 69, and 87.
While it is also common practice also for developers to include space set aside for common use in calculating how big an apartment being sold is, the revised regime will require developers to spell out the exact usable square footage of the uncompleted flats being sold. According to Bloomberg, typically as much as 20 to 30 per cent of new residential buildings are set aside for common use.
The new rules will also require developers to make floor numbering information in a more prominent manner in sales brochures, to ensure that buyers are not misled.
“The government is deeply concerned about some recent sales tactics in the first-hand uncompleted residential property market and confusing market information. The new measures will enhance the transparency of transactions of uncompleted first-hand properties and the clarity of property information,” a spokesperson for the Hong Kong government’s policy-setting Transport and Housing Bureau said.
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