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  • Sep 16, 2014
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LEADER

Sale of hotel units another housing headache for Leung Chun-ying

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

Property giant Cheung Kong has done nothing illegal in selling off 360 units in the Apex Horizon hotel in Kwai Chung. But the premise that someone has done nothing illegal usually signals debate and dissent, otherwise there would be no need to say it. In this case the developer has stirred up public anger and political and legal interest. The issue is the unfairness of the exemption from heavy stamp duties on buyers and quick resellers, which are aimed at cooling the red-hot market. Instead, the hotel sales are deemed commercial transactions.

More hotel rooms could go on sale in this way because of a legal loophole. In the case of the Apex Horizon, it was approved before the government specified in land leases in 2003 that hotels could be sold only as a whole. Thus, not only did Cheung Kong do nothing illegal, but the government is powerless to do anything about the inequity as things stand.

This is yet another political problem for Chief Executive Leung Chun-ying. His administration has staked its credibility on an effort to stem the flow of hot money into residential property. The market has continued to rise, even if his measures have taken some of the momentum out of it. The latest development reinforces the perception among critics that he cannot get anything done. Cheung Kong is controlled by Li Ka-shing, a strong supporter of Leung's election opponent, Henry Tang Ying-yen, and Asia's richest man, who is now perceived as having publicly challenged Leung's authority.

Hotel-room sales for investment and residential purposes are common enough overseas, which underlines a gap in Hong Kong's property market. The quick sale of two- and three-bedroom units at well under market prices nearby is evidence of a local demand. That said, Cheung Kong's move has sparked fears of speculation in tourist accommodation for residential purposes when tourism is booming.

Development minister Paul Chan Mo-po has warned buyers to beware of land-lease violations that could jeopardise possession of their units. Indeed, some law firms have declined to become involved in transactions because of potential legal risks. Hopefully, because tourist hotels are a lucrative business, Cheung Kong will not set a pattern which would tempt other hotel operators to follow suit. Meanwhile, the government needs to find a way to restore some fairness - perhaps by imposing a service levy on the sale of units of pre-2003 hotels and guesthouses.

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honkiepanky
I don't understand what the fuss is about. Virtually everyone in Hong Kong agrees that the city needs more residential units and fewer tourists. This action achieves both goals.
johnyuan
Your editorial describing the way Apex Horizon is sold because there is a legal loophole in land lease in 2003 is implying the land lease hasn’t defined what whole is. My guess, the spirit of the lease must be about the result of the sale of a hotel that its hotel function must remain in its entirety (whole). At such there is no legal loophole for the sale of Apex Horizon that as long as it remains operating as a hotel. On the contrary, if the government challenges the multi-ownership of a hotel, it will become a laughing stock of being ignorant of what market economy entails even in a not so ‘freest economy’ in Hong Kong. CY Leung and his administration must concentrate on the political implication rather than a commercial gain (it may not be for Cheung Kong) of the fallout by the sale of Apex Horizon. The rest of the society just be happy that there is a chance to own a piece of hotel that is lucrative awaiting for a limitless tourists coming from the north. Loophole is not but business oppotunity is.
 
 
 
 
 

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