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LCQ3:Property transactions of the development project of "39 Conduit Road"

     Following is a question by the Hon Lee Wing-tat and a reply by the Secretary for Transport and Housing, Ms Eva Cheng, in the Legislative Council today (January 26):


     After the media uncovered the unusual behaviour in the property transactions of the development project of "39 Conduit Road" in 2009, the Government first wrote to the developer of the property in March 2010 to make enquiries and then submitted the relevant correspondences to the Legislative Council ("LegCo") in July of the same year and indicated that it would follow up and investigate the incident.  The Police had also officially stepped in immediately to investigate the cancellation of the Agreement for Sale and Purchase ("ASP") of some of the first-hand units of "39 Conduit Road" and went to the developer's head office and the law firm concerned to seize a batch of documents suspected to be related to the case, and the investigation has been going on for more than six months.  In this connection, will the Government inform this Council:

(a) how many units and which units of "39 Conduit Road" have been successfully sold to date; of the respective selling prices of the units sold; the number of units the ASP of which has been cancelled and the units involved, and among these units, the number of those for which only a 5% deposit was charged; the respective number of units for which deficiency in price has and has not been recovered, and the deficiency in price recovered;

(b) of the total number of times the authorities have exchanged correspondences with the developer of "39 Conduit Road" to date; how many correspondences have not been submitted to LegCo and how they will arrange to pass those correspondences to LegCo; the progress and outcome of the follow-up actions taken and investigations conducted by the Lands Department and the Police on the incident; whether anyone has been interviewed; if so, who have been interviewed; whether they have examined if anyone has conspired to create fraudulent property transactions; and

(c) whether the authorities have learnt any lesson from this incident to enhance the restrictions on the sales of private residential properties under the "Consent Scheme", so as to plug any loophole that will enable developers to cooperate with buyers to create the illusion of transactions on the market?



     The Government is committed to enhancing the transparency of the sales of first-hand private residential properties, safeguarding the reasonable rights of consumers, and ensuring that consumers have access to accurate and comprehensive property information when purchasing first-hand private residential properties.  The Government does not tolerate deceptive transactions and the release of misleading and incomplete information on flat sales.

     In the past two years, the Transport and Housing Bureau (THB) has implemented, through the Lands Department's Consent Scheme (the Consent Scheme) and the guidelines of the Real Estate Developers Association of Hong Kong (REDA), a number of measures to enhance the transparency and clarity of the property information on uncompleted first-hand private residential properties.  These include implementing the "nine new measures"; requiring developers to make public information on transactions and cancelled transactions within five working days; enhancing the transparency of sales brochures and price lists; requiring that where there are show flats, the show flats should meet more stringent standards, including that at least one of the show flats must fully reflect the conditions of the actual flat to be handed over to buyers upon completion, and requiring developers to provide more comprehensive and detailed property information in sales brochures.  These measures have been implemented for a considerable period of time, and developers, the estate agency sector and the public are accustomed to and familiar with the requirements.  This has helped laid a solid foundation for the work of regulating the sales of first-hand residential properties by legislation.

     Following the media reports on the exceptionally high transacted prices of individual units of 39 Conduit Road, the Government and the public were concerned about 24 of those transactions.  In this regard, the Lands Department has issued various letters to the developer of 39 Conduit Road (the developer) between March 18, 2010 and now, to make enquiries on the concerned transactions.  The developer announced on June 15, 2010 that only 4 out of the 24 units had completed the transactions.  Relevant Government departments, including the Police, are investigating the case.  

     My reply to the three parts of the question raised by the Hon Lee Wing-tat is as follow:

(a) The Land Registry's (LR) record shows that, as at January 25, 2011, among the first 24 units, four had completed transactions (i.e. the assignments were completed).  The transactions of the remaining 20 units were cancelled.  Also, LR's record shows that, outside the first 24 units, there was another completed transaction (i.e. assignment was completed) and another four transactions which had signed the Agreements for Sale and Purchase (ASP) but there was no indication that the transactions were completed (i.e. there was no registration of assignments).

     In other words, as at January 25, 2011, altogether five units at 39 Conduit Road had completed transactions, 20 had cancelled transactions, and another four units which had signed the ASPs had not yet completed transactions.

     LR's record shows that the amount of consideration for the five units which had completed transactions ranged from around $95 million to $130 million.  Details are as follow:

     Out of the first 24 units, the consideration of the four units, namely Units 30A, 30B, 31A and 31B, was around $124 million, $134 million, $126 million and $134 million respectively.

     The consideration of Unit 21B, which was outside the first 24 units, was around $94.5 million.

     LR's record shows that, among the first 24 units, the following 20 units had cancelled transactions, namely Units 8A, 8B, 9A, 9B, 10A, 10B, 11A, 11B, 12A, 12B, 28A, 28B, 29A, 29B, 32A, 32B, 33A, 33B, 45A(also known as 68A) and 45B (also known as 68B).  

     According to the developer's reply to the Lands Department, it retained 5% of the transacted price of each of the 20 aforementioned cancelled transactions.  The developer had not pursued recovering the deficiency in prices of the 20 cancelled transactions.  

(b) The Lands Department sent 13 letters to the developer between March 18, 2010 and now, requesting the developer to provide information on those 24 concerned transactions, and received 18 reply letters from the developer.  That is, there were altogether 31 letters exchanged between the Lands Department and the developer in the aforementioned period.  

     Among the 31 letters aforementioned, after the developer took the initiative to pass to the Legislative Council (LegCo) on July 5, 2010 its reply letters to the Lands Department, the Administration also passed to LegCo on the same day the Lands Department's letters to the developer by that time and in their entirety.  Also, the Administration passed to LegCo on July 12, 2010 a duplicate set of the 20 letters between the Lands Department and the developer for the period from March 18, 2010 to July 5, 2010 in chronological order.

     There were a further 11 letters exchanged between the Lands Department and the developer between August 24, 2010 and now.  Four of them were sent by the Lands Department to the developer, and seven of them were sent by the developer to the Lands Department.  Primarily, the four letters of the Lands Department made further enquiries on the 24 transactions aforementioned.

     As the Administration had emphasised when it passed to LegCo in July 2010 the letters between the Lands Department and the developer, I must emphasise once again that, under normal circumstances, the Administration will not disclose information relating to a case which is under investigation by the law enforcement agencies, lest such disclosure will adversely affect and prejudice ongoing investigations or undermine any future actions that the Administration may take upon completion of the investigations.  The decision by the developer to take the initiative to release on 5 July 2010 its letters has however changed the situation by removing one of the major legal considerations, i.e. the possibility of any prejudicial effect on the developer resulting from the disclosure of the correspondence between March 18 and July 5, 2010.  Therefore, the Administration passed to LegCo the exchange of correspondence immediately after the developer had passed its letters to LegCo.

     Regarding the 11 letters exchanged between the Lands Department and the developer between August 24, 2010 and now, we understand that the developer has not disclosed them.  Therefore, the Administration has not disclosed them in accordance with normal practice.  Regarding the Hon Lee Wing-tat's question on how the Administration will arrange to pass the 11 letters to LegCo, we need to ascertain the developer's position on this.  We are now finding out the developer's position.  If the developer will disclose to LegCo its reply letters to the Lands Department between August 24, 2010 and now, we will also arrange to pass to LegCo the 11 letters in chronological order.

     As the Police is investigating the 24 transaction cases, it is not appropriate for the Administration to comment on the investigations.

(c) To further enhance the transparency of the transaction information in the sale of first-hand private residential properties, with effect from August 13, 2010, the Lands Department requires in the Consent Letters that developers also have to make public information on cancelled transactions within five working days after cancellation, in addition to making public in the developers' websites and sales offices transaction information within five working days after the signing of the Preliminary Agreements for Sale and Purchase.

     To further enhance the regulation of the sale of first-hand private residential properties, THB has established the Steering Committee on the Regulation of the Sale of First-hand Residential Properties by Legislation (the Steering Committee), to discuss specific issues on regulating the sale of first-hand flats by legislation.  The Steering Committee has commenced work in November 2010 and will complete its work and come up with practical recommendations by October 2011 for the Secretary for Transport and Housing's consideration.  Misrepresentation and the dissemination of false information is one of the key areas which the Steering Committee will consider.  THB's target is to take forward the subsequent consultation in the form of a White Bill in order to expedite the process.

Ends/Wednesday, January 26, 2011
Issued at HKT 14:34


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