Buying flats in Hong Kong no walk in the park
Buying Flats a Lottery
Don’t believe a word of all that hype you hear and read about weak demand for new flats and sales flat due to the new buyer’s stamp duty. Having just been through the tortuous process of trying to buy a flat in a new Cheung Kong development, I can tell you it is all nonsense.
The new project in question is One West Kowloon, in salubrious up-and-coming, (or so we hope) Lai Chi Kok, and features the usual multiple towers on top of podium, with flash marble-clad lift lobby, chandeliers and 43 floors in a mostly two or three bedroom configuration. Pretty standard fare, with completion due November 2013.
Our target was a two bedroom unit of something less than 700 square feet – who knows what the real measurement is by the time they have played about with the gross versus net usable area calculation. Suffice to say it had two reasonable bedrooms.
Playing around also seemed to be the game with the price – there was no fixed price, it went up and down with the floor and varied from day to day. It was also impossible to ascertain what floors would go on sale when, all was a moveable feast and meant ringing the agent hourly for updates on what units had been, or might be, released.
Now if you thought buying one of these gems was simply a matter of paying a deposit and signing the provisional sales agreement, think again. First, you have to persuade one of the chosen sales agents (usually from Centaline or Ricacorp or Midland Realty, who fight for an allocation of flats) to take you seriously. This involves handing over a bank draft, in this case for HK$200,000, made out to the developer. This is to show good faith and you are told it will not be cashed until the deal is done.
All this entitles you to is a ticket in the “raffle” to be one of the lucky ones who might be allowed to buy a flat. But the agent will not even put your name forward for inclusion until he is convinced you are gagging to buy. This did indeed require a leap of faith, to hand over a bank draft with no idea into whose sticky mits it might fall.
Then there was a meeting with a chap from Cheung Kong, plus a few agents. They explained that our target flat, on the mid to lower twenties, was not included in the batch of 10 floors that had suddenly been released – and sold – that morning, December 18. These 40 flats were from the 29th to 38th floors, we were told, and were anyway outside our budget, at HK$6.8 million. The higher you go, the more expensive the flats. We had a ceiling of $6.4m.
Interestingly, the information in newspapers and on websites differed somewhat from this. I variously read that on December 18 the “first batch” of seven flats had made $9,292 per sq ft, and elsewhere that on December 17, 60 units had “sold out.” Neither account matched what we were told, which was that 40 units had been sold on December 18.
What was clear was that floors 29 to 39 were sold and too expensive for us anyway. Categorically no lower floors would be released. But, then, we were told that if we bought a unit on the “lucky number 28th floor”, at the same price as the higher floors, we could confirm purchase right away and they could offer different payment terms to enable us to pay the extra $0.4m over our budget.
There were several options, one of which involved drawing down the mortgage in 60 days, rather than waiting till completion in November 2013. No raffle, confirm purchase now and the flat on the 28th floor is yours, we were told. I said we had always planned to buy one of the lower floors, when would they be released? The guy from Cheung Kong sucked his teeth. There was no way of knowing when the lower floors would come up, he said, ignoring the fact that the 28th was a lower floor and was now suddenly available. Perhaps not until second quarter 2013, he said, because the developer would probably hold them back until the price rose. He said this as if it was a certainty.
I pointed out the price might also drop in the coming few months, and he looked at me scornfully. We repeated that we did not want to exceed our budget so thanks, but no thanks, we’d take a chance on the lower floors whenever they were released. The Cheung Kong guy departed and the agents enthusiastically set about trying to interest us in another, cheaper, new development in Yuen Long.