My Take

Is legal loophole a financial noose?

PUBLISHED : Thursday, 21 February, 2013, 12:00am
UPDATED : Thursday, 21 February, 2013, 5:46am

Most of us can thumb our noses at authorities without suffering serious consequences. But few get to do it while making buckets of money in the process.

Say what you will about Cheung Kong supremo Li Ka-shing and his beloved lieutenant Justin Chiu Kwok-hung, the property duo certainly know how to stick it to the government and its recent measures against property speculation.

Chief Executive Leung Chun-ying can easily attract thousands of angry people to camp outside his office with his myriad unpopular policies. But Li needed just to say the word, and thousands of eager speculators flooded Cheung Kong's Apex Horizon hotel to buy its suites as property investments. All 360 rooms have been snapped up in just two days, at an average price of HK$5,200 per sq ft of gross floor area.

In times like these you have to wonder who really runs Hong Kong, and about the collective intelligence of its people. Can our people even determine who and what's good for them any more?

No doubt Leung would wish he had a clever right-hand man like Chiu. Instead, he has Development Secretary Paul Chan Mo-po, who as usual sounded and acted completely out of his depth. Chan, who has the distinction of being even more unpopular than his boss according to public opinion polls, warned the government could seize the hotel rooms if their transactions breached land-lease regulations.

Chan may think he has the law on his side, but I seriously doubt that because he has admitted Li's clever lawyers are exploiting a loophole in the hotel sales. In any case, does anyone think the government would dare seize the suites from their angry owners?

Li and Cheung Kong will be laughing all the way to the bank while delivering a blow for the long-suffering Real Estate Developers Association, which represents our most powerful property tycoons and in whose side Leung has been a thorn.

But they are likely to leave behind a mess for end users and the government as the investment and legal risks are unknown. Will owners be taxed as hotel operators? What kind of property is it when the owners can't live in it as residents? What is the resale value? Given their unquantifiable risks, the suites are anything but cheap.