Developers query plan to boost rivalry
Property developers say the Consumer Council's proposal to increase market competition by selling smaller Crown lots may not work.
The Real Estate Developers Association said it had no objection to the concept in principle, but added public auctions and tenders were not the only source of land for development.
It said redevelopment accounted for two-thirds of Hong Kong's annual residential supply of private sector housing.
Reducing the size of lots would not guarantee sites would only go to so-called 'smaller' developers, it added.
The Consumer Council report also showed it was not familiar with the workings of the property market by presuming that developers with land banks would always bid high to deter new entrants and increase asset value, the association said.
Developers with land reserves were generally more cautious and conservative at auctions and tenders, it said.
'Consumers want well designed, well built, large and secure estates with full amenities, which could not be achieved through smaller lots,' it added.
The association warned that the council's proposal to use Government or quasi-Government bodies to 'nurture' new developers and enable them 'to develop the capacity to take on larger projects' was dangerous.
It said the Government's Housing Authority was already the biggest developer in Hong Kong producing about 40,000 rental and home ownership units annually and the Land Development Corporation, to be upgraded to become the Urban Renewal Authority, looks set to be the second-largest developer.
The association questioned the vacancy rate quoted by the Consumer Council, saying it was misleading as first-hand properties were not the sole source of residential supply as there was a private housing stock of 900,000 units.
The sale of first-hand properties represented only about 20 per cent of annual private residential transactions.
The association said the council did not take into account the market had mostly been on a downturn from January 1994 to April this year.
The report also failed to recognise that the issuance of pre-sale consent changed constantly and developers had no way of predicting when consent would be granted and what specific conditions would be required. Therefore, preparation work for launching a pre-sale exercise could not be finalised until consent had been secured, it said.
'Given the above circumstances, an 11 per cent vacancy rate [of the housing stock] is not unreasonable,' it said.
The association said it had tried hard in the past few years to streamline development/redevelopment processing procedures, which were becoming more complicated and time-consuming.
It said it had suggested to the Government and banks that new and old homes should be treated the same way by financial institutions.
Older units should enjoy the same mortgage lending policies if they were properly maintained and certified by a recognised professional as structurally safe.