bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

sponsorType

authorLocations

authors

paywallTypes

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

factSheets

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

copyrighted

customTimezone

liveContents

Peggy Sito

Pressure is mounting on the Government to allow developers to pay land premiums in instalments, analysts say.

 Calls for changes to the method of paying land premiums have been made in recent weeks as tight liquidity, high interest rates and slow property sales continue to put pressure on developers' cash flows.

 So far, only a few developers have made individual requests to the Government about paying land prices in instalments.

 A spokesman for the Real Estate Developers Association said it had not raised the issue with the Government.

 The spokesman said it was up to individual developers to negotiate with the Government on the terms for their own projects.

 HKR International reportedly asked the Government if it could pay its land premium, which was still being negotiated, for its Discovery Bay extension on Lantau Island in instalments.

 It is understood Sino Group also asked for a deferral on a land premium payment for the extra floor area to be developed in the second phase of its joint-venture development at Olympic Station in Tai Kok Tsui.

 Though the Government's initial response to the requests appeared less than encouraging, it said it was studying the issue.

  Deputy Director of Lands John Corrigall said the Government had not decided on the matter, but he expected government departments would meet to discuss it.

 He declined to discuss the details of the suggestions.

 'Developers should welcome the move if it is approved by the Government,' Tony Tse Wai-chuen, executive director of Emperor International Holdings, said.

 'That will give another payment option for developers and relieve developers' tight liquidity pressure.'  Mr Tse said developers were in a difficult situation as banks were reluctant to extend loans to them amid uncertainty in the credit market.

 Due to the decline in property prices, developers were having difficulty using their sites as collateral to raise funds for construction, he said.

 An executive of another property company said land premiums constituted a large part of development costs, and allowing the payment to be made in stages could help ease the financial burden on developers.

 He said the Government would be guaranteed payment even if it was in instalments.

 'By allowing developers to pay in stages, it may increase the success ratio for land premium negotiations, given that developers have tight cash flows,' he said.

 However, Mr Tse said the Government might be concerned about how quickly the premiums would be paid because allowing payment in stages could affect its revenue.

 This year, the Government's property revenue would decline by billions of dollars because it suspended land sales.

 The proposed instalment payment method, if adopted, could further affect the Government's coffers, Mr Tse said.

 S.K. Pang Surveyors & Co managing director Pang Shiu-kee said he doubted the Government would allow developers to pay land premiums in instalments as it could give rise to criticism from political parties as to whether it was favouring developers.

 Chung Sen Surveyors director Cheng Wing-ming said the Government should not change the method of payment because developers' investments were commercial decisions and they agreed to take the risks when acquiring land.

 Paying land premiums in instalments is not new to Hong Kong. The Government used a similar method in the 1970s and 1980s to help revitalise the property sector, analysts said.



Developers seek time to pay