Property price surge pushes up profit

PUBLISHED : Tuesday, 06 December, 1994, 12:00am
UPDATED : Tuesday, 06 December, 1994, 12:00am

ABOUT half the $600 million profit the Housing Society will make from the sale of the more than 1,000 sandwich-class housing flats this month will be due to surging property prices.

The South China Morning Post revealed last month that the society would make a profit of more than $350,000 per flat in the Tsing Yi Island project.

The disclosure sparked concerns from legislators that there was a lack of control over how the society decided the price of sandwich-class housing projects, designed to help the middle class become homeowners.

According to information provided to legislators yesterday, the land premium for the project was $543.3 million, based on half the market value as at early 1993 when the land was granted to the society.

But the estimated value of the site, at half price, is now $827 million.

The paper confirmed about half the profit was a result of the low premium.

The construction cost is estimated to be about $475 million.

The proposed price range for the 1,024 units at Tivoli Garden, Tsing Yi Island, is between $1.3 million and $2.2 million, about two-thirds of the market value.

Legislators were told in the paper the society, a non-profit making organisation, would use the surplus to cross-subsidise other sandwich-class projects with higher development costs.

But there were concerns among legislators that the price range was beyond the reach of the sandwich class with a monthly income between $22,001 to $44,000.

Some of them criticised the profits and accused the society of 'grabbing money' from homebuyers.

They urged the Government to monitor the pricing of sandwich-class housing.

Also yesterday, the Government unveiled a detailed timetable for the production of the 45,000 flats suggested by the taskforce on land supply and property prices.

According to the plan, all the 15,000 extra private flats will come on to the market within two years after 1997.

A total of 6,500 flats are expected to be completed in 1998 and another 8,100 flats will be ready by 1999.

The 10,000 sandwich-class housing units will be built from 1997 to 1999 while the extra 20,000 public housing units will be finished by 1999 to 2001.

Legislators last month rejected the setting up of five directorate posts in the Planning, Lands and Buildings Department because the Government failed to give a concrete timetable on the number of flats to be produced each year.