Developer must set priorities under new floor area rules

PUBLISHED : Monday, 24 January, 2011, 12:00am
UPDATED : Monday, 24 January, 2011, 12:00am

I refer to your editorial ('Developers need to shake off role of villain', January 20). While the interview you refer to was conducted in the best spirit and in an ongoing determination by the Real Estate Developers Association of Hong Kong (REDA) to increase transparency and flow of information, several of the points you make are taken out of context.

Your editorial implies that REDA is threatening that, if the new rules on gross floor area are imposed, the developers would stop building amenities, such as clubhouses and swimming pools, thus shifting the onus onto public service providers, such as the Leisure and Cultural Services Department.

What in fact we said was that, under the new rules governing GFA as drafted by the Buildings Department, developers would be forced to prioritise what they build in order to get the most value from the building for both themselves and the tenants, and that amenities, such as swimming pools or larger balconies, may not be a priority in some development plans. This would therefore put greater pressure on public amenities as people sought leisure activities that may not be available in their buildings. Obviously, this is not in the best interests of the community. But it has no link whatsoever to transparency or accountability as you suggest.

It is simply a matter of reality and sound business.

In an often repeated misstatement, you also suggest that developers get the GFA concessions for free and then sell them on to the public at full market value.

This common misrepresentation overlooks the way in which the land sale auction system works in Hong Kong. These auctions are highly competitive and everyone knows that the high bid wins.

All developers, therefore, cost the GFA concessions and the price of the amenities into their bids before stepping foot into the room. They must take into account the maximum utility they can get to the utmost offer they can make. In other words, the developer must build the full market price of all features, whether they are green or not, into his bid. Nothing is for free; although some in government would have the public believe that.

The point is that the existing policy was put together to encourage green features for a reason. Now that is going to change because there may have been flaws in the system. We are all for change if something is not working correctly, but policy changes should be for the better and aimed at maintaining a level of lifestyle the people of Hong Kong have come to expect, and not at trying to shift blame for failures.

REDA and the developers are well aware of the needs of the market and we support integrity in the marketplace. We therefore believe the government should work closely with the property sector to draft a plan that addresses the issues at hand and, at the same time, meets the needs of all Hong Kong people.

Louis Loong, secretary general, the Real Estate Developers Association of Hong Kong