Early birds in Hong Kong didn't land cheaper flats at Festival City launch

HONG KONG: The housing market here seldom sleeps, as Louis Leung and his wife know all too well.

It was not until 11.55pm on Friday (March 26), nearly 11 hours after they began, that they signed a preliminary agreement to buy a 980 sq ft flat for HK$9.6 million at Festival City, a joint venture of Cheung Kong (Holdings) and MTR Corp in Tai Wai near Sha Tin.

Thousands of people had crowded the Cheung Kong sales office in Hung Hom.

"My wife and I have not had dinner and we ended up paying an expensive price for the flat that we bought," Leung grumbled.

He said their budget was only HK$8.5 million (RM3.58 million), but they had to increase that amount because the sales agent who assisted them could not get a cheaper unit in the first batch of 20 apartments at the 1,360-unit Festival City phase one development.

For the past 10 years, they have lived in a 600 sq ft apartment in Sha Tin. The chance to upgrade to a bigger unit in a new housing project in the district proved irresistible.

Leung said: "I'm not exactly happy or excited with the unit my wife and I bought, because the price is HK$1 million over our budget. But we had little choice. We feared that prices would go up more, and we wouldn't have the chance of owning a unit in this project."

After getting a call from his agent, Leung said he and his wife arrived at Cheung Kong's sales office at 1pm. He was told the chances of buying the first batch of units would be better if he arrived early.

On Thursday, Cheung Kong announced it would release the first batch of 20 units of 980 sq ft in blocks 2 and 3 at an average HK$8,692 per sq ft for buyers opting for cash payment. The cheapest one was HK$8.32 million.

But instead, when the official sale started at 5pm on Friday, Cheung Kong first released more than 100 of the 1,300 sq ft units, which were offered at HK$9,000 to HK$10,000 per sq ft.

When these units, each worth HK$12 million to HK$14 million, had been sold, the developer then released additional units of 980 sq ft at 10pm.

But these smaller units were above the 30th floor in block 5. They were not the less expensive units that were listed as being in the first batch in blocks 2 and 3. Moreover, they were offered for at least HK$9,800 per sq ft, nearly 13% higher than the average price of the original first batch.

Buyers like Leung, who had their eyes on the less expensive first batch, say they were confused and disappointed by the sudden switch. But they did not want to lose out on a chance to buy a flat.

Leung said his opportunity to buy did not come up until 10pm, but he still did not have a chance to purchase a unit he wanted in what was supposed to be the first batch.

One of more than 300 who bought apartments in the development on the first launch, Leung said he was unsure if he had made too hasty a decision. He said that in mid-2008 he had missed the chance to buy a unit at The Palazzo in Fo Tan near Sha Tin when it was launched at HK$7,000 per sq ft.

"Since then, prices have been continually rising," he said. "I just bet that prices have not reached the peak yet."

Cheung Kong executive director Justin Chiu said on Friday the first batch of units would be offered on Saturday, but he did not say why the order of the sale had been switched.

On Saturday, some of the units were offered, with the remainder going on sale yesterday (March 28). The developer pulled in more than HK$3 billion from the sale of 300-plus units in just 4 1/2 hours on Friday. However, since then, sales have slowed. Thirty units sold on Saturday.

Leung and others like him say the developer advertised the less expensive units in order to draw thousands of potential buyers. But having done so, Cheung Kong switched to selling the more expensive units.

Sammy Po Siu-ming, New Territories director for real estate agency Midland Realty, said it was not unusual for developers to change the sequence of a sale.

"Some developers will hold the first batch until the last sale day," he said, pointing out that there was no requirement for them to sell the first batch on the first launch day.

Pang Shiu-kee, managing director of SK Pang, said an ordinary person would interpret that the "first batch" of units should be the first to be put on sale.

"They are twisting the meaning of the term," he said. "As buyers move in a herd, they will follow if they see others snap up more expensive units in fear of further increases in prices."

He said he had reservations about the developers' sales strategies, but said the government consent scheme, which regulates the developers' sale of uncompleted flats, did not include such detailed definitions.

"If everything needs to be written in black and white, Hong Kong will require heavy government intervention or be like a planned economy," he said. But Pang also said consumers themselves should bear responsibility. "It is abnormal for homebuyers to make purchases at midnight," he said. "It is even insane if they give you a lemon when you want to buy an orange. And you even agreed to buy!"

The issue raised the question of whether these blind purchases were driven by a speculative mentality to gamble on future price increases and ignore their risk, Pang said.

Although Cheung Kong capped the number of buyers -- each person or company was allowed to buy no more than two units -- there were investors who bought in bulk.

Po said one of his clients in Hong Kong bought five units for a total of HK$60 million through different people's names.

A group of buyers from Wenzhou reportedly purchased as many as 20 units for HK$200 million. -- South China Morning Post