39 Masterpiece flats sold to 'VIPs' before public

PUBLISHED : Thursday, 11 March, 2010, 12:00am
UPDATED : Thursday, 11 March, 2010, 12:00am

Fresh questions are being asked about sales practices at a luxury Tsim Sha Tsui tower.

Days after being quoted as saying several of the first flats put on the market were sold to relatives of a director of the firm that co-developed it, a lawmaker said yesterday that the Urban Renewal Authority had allowed its co-developer to sell 39 flats to its business partners before public sales began.

These 'business associates and business partners', who acquired more than 11 per cent of the 345 flats in The Masterpiece, were on a 'VIP list' approved by the authority and the board of developer New World Development, Lee Wing-tat said, quoting an e-mail from the authority.

Lee, of the Democratic Party, said he had asked the authority to inquire about the 'VIP sale' after learning about it from an informant.

The 39 flats, between the 38th and 57th floors, were sold for between HK$16 million and HK$48 million before the public sale in August.

The fresh finding adds to Lee's earlier accusation that New World Development was trying to manipulate sales by selling at least seven of the first batch of flats in the public sale to managing director Henry Cheng Kar-shun's relatives.

It was reported that Cheng's son, cousin and uncle had bought the seven flats in the name of several firms, including offshore companies.

The Masterpiece, a 67-storey tower containing a hotel, apartments and a mall, made headlines in September for the record-setting sale of a one-bedroom flat that fetched HK$24.5 million.

'The VIP sale is even more serious than Cheng's relatives buying in the public sale. Is the developer trying to benefit its friends and asking them to help create an impression that the property is very marketable?' Lee asked.

He also criticised the authority for not disclosing these internal sales, which would mislead the public on the market situation.

'The authority, as a public organisation, should keep sale practices as transparent as possible. It should inform the public if there is any internal sale,' he said.

The authority, in a written statement, admitted 39 units were sold to New World's business partners before the public sale, at prices approved by both parties. Each partner was restricted to at most two units. New World's staff and directors were not involved in the internal sale, it said. A spokesman for the firm said last night the internal sale was done according to procedures approved by the Urban Renewal Authority.

'Internal sales are a widely accepted practice in the real estate industry,' he said.

Secretary for Development Carrie Lam Cheng Yuet-ngor, said in a Legislative Council meeting that although there was no breach of rules, the government would require the authority to consider whether it should in future exercise control over purchases in a project by its co-developer's staff and directors. At present, authority staff must get approval before buying flats, but staff of a co-developer need not.

'My view is that market information is not just about prices but also about market response - whether the market is really keen about the project. This has to be reflected in a transparent manner,' Lam said.

In response to lawmakers who asked why The Masterpiece was zoned commercial - allowing for a taller building - while most of the development is clearly residential, Lam said the site was zoned 'comprehensive development area', allowing a plot ratio of 12. No residential zoning was involved in the project, she said.