Developers need to shake off role of villain

PUBLISHED : Thursday, 20 January, 2011, 12:00am
UPDATED : Thursday, 20 January, 2011, 12:00am

In the popular narrative of Hong Kong's social injustices, the developer is often caricatured as the pantomime villain, and it can sometimes be difficult to find information reflecting their views on various controversies. The decision by the Real Estate Developers Association to publicly voice its concerns about new rules governing the allocation of extra gross floor area (GFA) is therefore greatly welcome. A fairer society will only be achieved by constructive debate about perceived injustices, not through a monologue of discontent.

Indeed, the association's interview with the South China Morning Post this week is most revealing about the difference in perspective between developers and the public over the problems regarding GFA. The association warns that developers will be hesitant to build swimming pools under a cap on free allocation of GFA, since pool plant rooms require that extra area. Any cap on concessionary GFA could kill off the current trend of residential blocks providing gym and swimming pool facilities: 'The Leisure and Cultural Services Department will have to step up its work,' said the association. Balconies, bay windows and covered walkways, previously constructed within the allocation of free GFA, would also be things of the past if there is a cap.

However, much of the discontent has arisen because purchasers now find themselves living in flats smaller than what they believed was advertised, while having to pay management fees for the maintenance of various facilities they hardly use. Imagine their response if the association warned them that the price to be paid for greater transparency and accountability over the purchase of flats was that 'the Leisure and Cultural Services Department will have to step up its work'.

One of the core characteristics about Hong Kong is that when it comes to commercial activity, this city is supposed to have the utmost integrity. In other words, you only sell what is yours, and purchasers get what they paid for. And yet in our property market, this has been turned on its head. The concessionary policy grants exemptions to amenities and green features, clubhouses and other common corridors from the calculation of the GFA during the sale to a developer. And so while developers can build such features without paying a premium for the extra area, they then charge full market value for them. The reference to the GFA of a flat is also misleading, since a large percentage of that GFA is not for private use, and is often unusable in the first place. In a belated response to public outcry, despite calls for law reform in these areas over 15 years ago, various government departments are now working on increased regulations such as a cap on GFA concessions to 10 per cent and the use of internal, or saleable area, to refer to the size of a flat, rather than GFA, in sales materials. The reforms are aimed at increasing transparency and accountability.

Unrealistic warnings about sports and planning policy disruptions due to the reforms miss the point and show a worrying disconnect with public sentiment. This is the association that proposed self-regulation of the industry, with itself as the regulator, over misleading sales practices. The Icon 'rubbish flats' showed up the flaws in that approach since that developer was not a member of the association and not subject to its rules. Unless developers make an effort to understand that consumers are entitled to expect a fair deal over the most important transaction in their lives, they will not be able to shake off the role of the villain in today's Hong Kong story.