Chinese Estates Holdings

Chinese Estates to seek compensation from Macau over La Scala land deal

Chinese Estates will seek compensation from Macau government for invalidating La Scala land deal

PUBLISHED : Thursday, 16 August, 2012, 12:00am
UPDATED : Thursday, 16 August, 2012, 3:52am

Chinese Estates Holdings said it was determined to pursue compensation from the Macau government and the original owners of five plots of land that comprise its HK$20 billion La Scala residential project after the sale was voided amid a corruption case involving two Hong Kong tycoons.

The Hong Kong listed property developer said it would appeal the decision of Macau Chief Executive Dr Fernando Chui Sai-on to invalidate the land sale.

Chinese Estates chairman Joseph Lau Luen-hung and tycoon Steven Lo Kit-sing will face trial in Macau next month on charges of paying HK$20 million in bribes to former Macau public works chief Ao Man-long to secure the plots. Ao was jailed for 29 years in May for corruption and money laundering.

The 304 buyers of flats in the project will have their stamp duty refunded when they show proof that the developer had repaid their deposits, the Macau Bureau of Finance said.

Buyers, who paid between 1 per cent and 3.15 per cent of the flat price as stamp duty yesterday welcomed the tax rebate, though the developer had not contacted them. But Macau investor Harry Lung, who acquired three apartments at La Scala for HK$60 million, said: "Whether Chinese Estates repays the deposit, the government should repay the stamp duty immediately."

Another buyer who bought a flat for HK$7 million, said she had lost confidence in both the developer and the Macau government. She said she could not buy another apartment of a similar size as prices have surged since her purchase.

A company spokeswoman yesterday refused to comment on the issue.

The combined deposits paid by the 304 buyers is estimated to be worth HK$383 million.

Ronald Cheung, chief executive of Midland Macau, believes the developer does not need to compensate buyers in this situation.

The developer had invested about HK$2.8 billion on the development. Kenny Tang Sing-hing, general manager at AMTD Financial Planning, said the incident would have a huge impact on the company over the next year or longer, and the developer would need to make a provision.

"This is different from the company's losses on stock investments recorded previously. These were a book loss, while the investment in La Scala is a real loss," he said.

Tang said the developer could dispose of non-core properties to help its cash flow. Property agents said Chinese Estates was selling a retail shop on Jaffe Road, Causeway Bay, for HK$560 million and shops at Chic Castle in Mong Kok.

Chinese Estates' share price was unchanged at HK$9.30 yesterday.