Developers say government may be forced to act if launch of New World's next project turns ugly Developers fear that a repeat of chaotic sales at a New World Development project may prompt the government to reintroduce restrictions on primary transactions. New World Development is expected to launch its 1,472-unit Tseung Kwan O project, The Grandiose, in the coming weeks. The developer's chaotic internal sale at its last project, The Merton, in Kennedy Town, was widely criticised for denying end-users the opportunity to buy the first batch of relatively cheap units. 'If such a chaotic situation emerges again, I fear the government may reintroduce restrictions on internal sales, or even on developers' marketing strategies as a whole,' said a director of a locally listed developer. In a bid to stimulate sales, in 2002 Secretary for Housing, Planning and Lands Michael Suen Ming-yeung announced the removal of a 30 per cent cap on the number of units sold internally. During the mid-1990s, when speculative selling was rife, the internal sale ratio was capped at 10 per cent. Developers used to sell units to their friends or related parties through internal sales until the removal of the cap gave the public the chance also to buy flats sold internally through an arrangement with estate agents. At the internal sale of The Merton, hundreds of prospective buyers crammed the sales office while many others complained that they were barred from buying units. The day before the internal sale, New World sold more than 200 units to staff at prices as low as $3,300 per sq ft. It then raised its asking prices by up to 8 per cent. New World staff who had bought units the day before the sale resold their apartments at prices 10 per cent to 15 per cent more than they had paid 24 hours earlier to flat seekers who had queued for hours. '[New World's] chaotic sale at Merton has already raised government's concern,' said the director of another locally listed developer. 'But I think the government is unlikely to tighten restrictions on internal sales just because of a single developer's practice.' He said New World's controversial sales strategy, which had been applied to many of its projects - such as Queen's Terrace launched in 2002 - had raised concern among developers. 'Most developers use various marketing strategies, such as selling units to bulk purchasers to stir up buying sentiment, but it is a bit too much to see flat seekers approached by speculators while they are lining up in the sales office,' he said. New World was unavailable for comment yesterday. A Housing Department spokeswoman said yesterday the government was monitoring the situation but would not disclose whether it planned to take any action. Property observers said developers preferred to sell flats through internal sales because the marketing system gave them flexibility. Under the internal sale scheme, developers are free to choose which information to disclose and prospective homebuyers are limited in the amount of information they can demand. For example, developers are not obliged to share the price list for all the units in a development. They are also free to decide on the number of units to be put up for internal sale and to choose buyers. Property agents said New World was unlikely to use a chaotic sales strategy for its Tseung Kwan O project as keen competition was expected in the district's primary property market. 'Unlike the case of The Merton, which was the only new project in Kennedy Town, The Grandiose will face competition from a nearby Sun Hung Kai Properties project and a Cheung Kong project at Tiu Keng Leng station,' said the director of a real estate agency.