Hong Kong developers vow to sell 20 per cent of housing estate flats on the open market, yielding to criticism of unfair tender process

By Sandy Li and Joyce Ng sandy.li@scmp.com / https://www.scmp.com/business/article/3004727/hong-kong-developers-promise-sell-20-cent-flats-housing-projects-open?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | April 5, 2019 10:25 AM SGT
The industry body for Hong Kong's property developers said its members would from now on ensure that 20 per cent of flats in a new project are sold on the open market, as the government warned it could take action against those that sell through tender.
Lawmakers have slammed developers for the increasingly widespread and "unfair" practice of selling new flats through tender, a marketing tactic they claim puts the buyer at a disadvantage. And they were quick to criticise Thursday's decision by the Real Estate Developers Association (REDA) for not going far enough.
According to government figures, use of the tender process, in which homes are sold to the highest bidder, has doubled recently as the city's builders try to push up prices amid a slumping market.
The practice has raised concerns among senior government officials and regulators, who have urged developers to use the more transparent method of selling on the open market.
On Thursday REDA said its members " about 90 per cent of Hong Kong's builders " had now agreed to sell a fifth of new units in each batch of a "non-luxury" projects on the open market. The industry body had called a meeting to discuss the issue after saying the spike in small flats being sold through tender was "not what we want to see."
The decision that emerged from the meeting was immediately criticised by lawmakers, because it would still leave developers free to sell the remaining 80 per cent of a project through tender.
"Earlier this week, REDA warned members not to do too many tender sales. One would have thought they were trying to get things right. Now it turns out they are only pretentious," said Wan.
He said he would urge the housing minister to ban the sale of small flats through tender, describing the practice as "unscrupulous".
Ahead of REDA's meeting, Secretary for Transport and Housing Frank Chan Fan said the government would be closely monitoring industry...