Single block flats priced by saleable area more expensive than Peak homes

PUBLISHED : Tuesday, 01 January, 2013, 12:00am
UPDATED : Tuesday, 01 January, 2013, 11:08am

Some mass-market flats in single blocks are more expensive per square foot than properties in Repulse Bay and The Peak when their price is calculated according to the saleable floor area.

In May, the Estate Agents Authority ordered agents to state the saleable area in all promotional material for second-hand homes from today to increase transparency in the market.

For years, developers and agents have sold homes according to gross floor area, for which there is no clear definition and which can include a unit's share of communal areas such as public corridors, lobbies and staircases.

Now agents advertising second-hand flats must give at least equal prominence to the display of their saleable area - the actual size of the home, including balconies but excluding common areas and bay windows.

But a discrepancy occurs when the efficiency rate of the property - the ratio of saleable area to gross floor area, expressed as a percentage - is taken into account.

Single pencil-like buildings have a lower efficiency rate than big housing developments because a larger area of common facilities - such as the walls, roof, corridors and lifts - is shared by a small number of individual owners.

One agent, who did not want to be named, said: "Buyers will know a large part of the purchase price actually covers a lot of non-living space.

"They will feel uncomfortable paying HK$4 million for a flat whose net area is less than 200 square feet."

That will affect buyer sentiment to an extent, said Vincent Cheung Kiu-cho, national director for China at property consultant Cushman & Wakefield.

For example, a flat at the single-block development Queen's Cube in Queen's Road East, Wan Chai, was resold on October 24 for HK$9.8 million. This is equivalent to HK$16,955 per sq ft based on its gross floor area of 578 sq ft.

But the price increases to HK$25,995 per sq ft when calculated according to its saleable area, which is just 377 sq ft.

This is more expensive than a flat in Nicholson Tower on The Peak, which was resold in September for HK$38.5 million, or HK$23,504 per saleable sq ft.

That flat has a saleable area of 1,638 sq ft, against its gross floor area of 1,993 sq ft.

In Hung Hom, a flat in the Met.Focus sold for HK$3.79 million, or HK$12,718 per sq ft under the gross floor area calculation. But its net area is just 195 sq ft, against a gross floor area of 298 sq ft, so the transaction price is HK$19,436 per saleable sq ft.

This is pricier than the HK$19,357 per sq ft of saleable area for a flat in South Bay Tower, Repulse Bay.

Ringo Lam Chun-chiu, valuation director of surveyors' firm AG Wilkinson & Associates, said: "This is the purpose of the change in government policy. The government wants to increase transparency in the property market." According to Midland Realty, second-hand prices calculated by saleable area averaged HK$8,560 per sq ft by yesterday, a year-on-year rise of 21.3 per cent.

The average price per sq ft of gross floor area was HK$6,848.