Our property market has to be transparent
A healthy property market is one of the keys to Hong Kong's success. But, as with any market, its efficiency and long-term well-being depend on transparency and fair play. This is why questionable property transactions must be thoroughly investigated and action taken to ensure there is no abuse. Public concerns have been raised by recent high-profile cases involving questionable sales at luxury developments. These have occurred at a time when the government is under pressure over rising property prices, especially at the top end. It is good, therefore, to see that the government has reacted by pledging to investigate such deals. Officials are making all the right noises. But further action will be needed if public confidence in the market is to be maintained.
Unusual sales transactions at 39 Conduit Road and unfair pre-public sales at The Masterpiece in Tsim Sha Tsui to a co-developer's associates are among recent incidents that call for closer scrutiny of the property market by the authorities. It does not appear that the developers have broken any law. But the two cases have given rise to allegations they were seeking to manipulate the market. Part of the problem is the lack of transparency for property deals.
Housing chief Eva Cheng was asked in the Legislative Council why the use of misleading or false information to manipulate prices is heavily penalised in the stock market but not in the property market. She replied that properties and shares are two different products and so cannot be regulated by the same system. That is true. But no one is saying the same regulations or regulators should be used to supervise both markets. It is the principle that is important. A modern and vibrant market must be transparent. This means key players cannot be allowed to use misleading information to manipulate prices or mislead buyers. It is elementary and well recognised for any market, not just those for stocks or property.
A healthy market must also have a level playing field for all stakeholders, not favouring a privileged few. Cheng recognised this when she acknowledged the need for transparency. But she said regulations had already been tightened. The regulatory tinkering undertaken so far, however, is not sufficient, as the sales at 39 Conduit Road and The Masterpiece suggest. In the Conduit Road case, it appears Henderson Land has completed the sale of only one flat, though it had said earlier all 25 in the first batch of released flats were sold. It transpires that the 24 purportedly sold flats were taken up by a buyer or buyers using shell companies registered in the British Virgin Islands - and all using the same law firm. Henderson said the sales were only delayed. This raises questions which need to be answered.
With The Masterpiece, New World Development sold 39 flats to business associates before selling to the public. This practice is banned for its partner, the Urban Renewal Authority, as a public body. Yet, it is allowed for a private developer. If sales go well, the associates make an easy profit. If they do not, they help create an impression of strong demand. Clearly, such internal sales should be disclosed. The property market plays a dominant role in our economy. It is time for developers to accept the same regulatory standards as apply to companies in other markets.