Cut-price sale of flats on harbour stirs anger

Developers stand to make $6b even after tearing down estate at Hunghom

A harbourfront housing estate built for the government but left unsold to help stabilise property prices has been bought back by its developers for $1,800 per sq ft.

The price was so low they stood to make over $6 billion in profit, even after demolishing the flats and putting up luxury blocks, angry legislators said last night.

The government had been seeking $2,300 per sq ft for the 2,470 flats, with gross floor area of 1.55 million sq ft, in the Hunghom Peninsula development. A housing bureau source defended the deal as the best it could have got.

The flats - built under the now defunct Private Sector Participation Scheme (PSPS) - were sold for $2.778 billion to First Star Development, a joint venture between Sun Hung Kai Properties and a New World Development unit. New World, and a company acquired this month by Sun Hung Kai Properties, built the estate.

The deal brought strong criticism from politicians, who said the sale unfairly favoured big developers.

They said it could give the private consortium a windfall of nearly $7 billion, or $4,700 per sq ft - based on demolition costs of $300 per sq ft and construction costs of $1,200 per sq ft, and the $7,000 to $8,000 per sq ft that flats in the Harbourfront Landmark, a nearby high-end housing project, are being sold for.