Firm had grand plans for deserted village

PUBLISHED : Friday, 04 November, 2011, 12:00am
UPDATED : Friday, 04 November, 2011, 12:00am


An international property investment company considered financing and developing small houses in Wong Chuk Yeung, Sai Kung, but says it dropped the plan after initial research.

IP Global, which along with its subsidiary IP Homes is an active player in the Sai Kung and Clear Water Bay property market, said its scrapped plan had nothing to do with a covert deal in which some Wong Chuk Yeung villagers agreed to sell their small-house rights to a developer.

IP said it investigated a business opportunity of 'financing and developing' small houses at the deserted village site last year. It intended to develop 20 small houses on a 'small parcel of private residential land' that it did not own and studied financing options, but the company decided not to take it any further.

'IP Homes made the decision not to pursue this venture because of the environmental status of the area and the zoning issues attached,' Tim Murphy, chief executive of IP Global and founder of IP Homes, said.

Despite this, the companies are said to have approached potential investors to take part in a private equity deal to finance the development.

A potential investor said he was approached last summer and was shown a Powerpoint presentation on the master layout plan for the village, with an architect's impression on how the houses could look.

The investor said the companies sought wealthy people wanting to create a pool of funds to finance the project which they said had huge potential to appreciate in value,

'IP was very high profile and spoke to a lot of people,' he said. 'Their client base for international property is all CEOs, directors, lawyers, doctors ... all high net-worth individuals,' he said. But the investor had doubts that the development was legally sound. 'It's a very grey area legal-wise because these houses are supposed to be for indigenous villagers, not expatriates,' he said.

In response to inquiries by the South China Morning Post, the companies said the land they had been eyeing had no issues regarding the sale of small-house rights, but would not say clearly whether they approached investors, how they came up with the idea or whether they had business connections with other developers.

IP also did not elaborate on what financing options it had looked at, but a promotional e-mail issued by a salesman from IP Global last year shed some light on what the deal could have been like. The e-mail to a potential investor in Singapore invited him to a property investment launch and take part in a private equity deal for houses to be acquired in Clear Water Bay.

'We are going to acquire three houses in Clear Water Bay. The vendor will be developing the houses and they will be delivered to us in 2.5 years, fully completed but unfurnished. We will then be leasing the houses out into the local market for a further 2.5 years and then liquidating the houses into the secondary market to take our gains,' the e-mail said.

But the e-mail said the 'major obstacle' to capitalising the gains was the 'large deposits' required to acquire these assets - which it said would be at a discount to the secondary market. Investors were asked to take part in the deal at a minimum of HK$100,000 and they were told that the return could be as high as 70 per cent in a five-year period.

The e-mail also described Clear Water Bay as a profitable property market with huge growth potential.

'IP Global expects to see strong capital appreciation in Clear Water Bay moving forward driven by a mass migration trend of wealthy professionals moving from established residential areas on the island and out to Clear Water Bay and Sai Kung,' the e-mail said. 'The attraction for many people is the opportunity to buy a detached house with swimming pool for the same price as an apartment on [Hong Kong] Island,' the e-mail said.

A spokeswoman for IP Global and IP Homes said the launch was about three house renovations in Mau Po and Ng Fai Tin in Clear Water Bay. No details of the event were given.

According to surveyors, houses in Clear Water Bay can fetch on average HK$20 million, while costing only about HK$1 million to build, excluding the land prices, renovation and other hidden costs.


The potential price for a detached Clear Water Bay house, say surveyors, which costs around HK$1 million to build