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Anti-competition: Developers’ hoard of empty flats

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  1. #1

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    Anti-competition: Developers’ hoard of empty flats

    are developers’ hoarding of empty flats an anti-competitive behaviour? Can the Competition Commission take actions against them?

    https://www.scmp.com/property/hong-k...-kongs-housing


  2. #2

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    Kerry properties built 1500 units. If they built a ghost town and holding all 1500 units for many years (like I think it was Hampton Place in Olympic) then I could understand some outrage. But actually they sold 1200 last year and now holding on to 300 empty units now. This is not really a big news story to me, sounds like what any developer should do as part of their normal business activity, not sell all they have during the pandemic last year since now in 2021 prices are about to skyrocket higher than we have ever seen before.

    Kerry would have to be stupid if they sold everything during the pandemic. I'm actually quite surprised they sold most last year and only holding 300, they sound like one of the good developers that should be applauded rather than attacked.

    shri and traineeinvestor like this.

  3. #3

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    Remove the incentive to hoard, whether by requiring sale of all units by X period of time, or simply ensuring regular supply available to the market (brownfield development/renewal) so it is not a one way bet.... The latter is my preference but much more difficult, and I think (or at least feel) the same would then apply to the market in general (not just developers) about the one way bet.

    irisboards likes this.

  4. #4

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    Quote Originally Posted by AsianXpat0:
    Remove the incentive to hoard, whether by requiring sale of all units by X period of time, or simply ensuring regular supply available to the market (brownfield development/renewal) so it is not a one way bet.... The latter is my preference but much more difficult, and I think (or at least feel) the same would then apply to the market in general (not just developers) about the one way bet.
    There is not much commercial incentive to hoard as a developer as in just sit on properties which you have spent billions developing.

    What bdw says is correct - holding back and gradually selling is a good return on investment in many cases. As investors everyone goes "buy some every month" / "buy the dip" so why should it be so different from a business perspective?
    bdw and traineeinvestor like this.

  5. #5

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    Perhaps I remember wrongly but I thought I saw something about developed units held for years without being sold, whether for a market “recovery”, or sharp appreciation I do not know.

    In any case I was thinking along the lines of a 2-5 year period so property is not off the market for up to one or more cycles. Staggered sales of the sort you and bdw mentioned should not be touched by something like that.

    I do agree in principle that the constraints on market (or more specifically, developer) autonomy should be avoided as far as possible, that’s why my pretence rather is towards correcting the insufficient supply characteristics of the market.

    https://www.scmp.com/news/hong-kong/...dards#comments

    OTOH this is one aspect of market failure that coming from somewhere other than HK I do feel needs correction.


  6. #6

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    Wonder how many empty flats we're going to have once the Lantau Tomorrow project is completed.


  7. #7

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    Important topic to discuss in the context of HK housing policy - I've looked at a few flats in the past / been sent lists from agents and even flats with build dates 4-5 years ago you can sometimes see that the vendor name is actually that of the developer - i.e. it's never been lived in and was held by the developer the whole time.

    alexdown likes this.

  8. #8

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    Quote Originally Posted by AsianXpat0:
    Perhaps I remember wrongly but I thought I saw something about developed units held for years without being sold, whether for a market “recovery”, or sharp appreciation I do not know.
    It was me. I was referring to "The long beach" near Olympic station.
    The Wikipedia article kinda hint that practice https://en.m.wikipedia.org/wiki/The_Long_Beach , I was living next door and in 2013 at least four towers were completely empty (=completely dark at night, not even service lights). Developer was releasing small batches of apartments and having "viewing" events every couple of months.

    I almost bought one in 2017, but it was 8 years old by then, some visible construction defects, but they didn't want to rectify them as there was no longer developer warranty even tho nobody ever lived in before.
    AsianXpat0 likes this.

  9. #9

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    What is the number of vacant but owned flats compared to unsold primary market flats?

    Surely it has been government policy to allow hoarding of primary market unsold flats and not to penalise vacant secondary market flat. Should we be questioning government policy on such an emotive issue?


  10. #10

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    Laws of supply and demand dictate developers can sell at a higher price if they control the supply curve. This is exactly what they're doing. The HK government lets them get away with it because they're both beneficiaries of high land prices.

    Remember the vacancy tax that was supposed to be passed as legislation? Scrapped into the dustbin of history.

    Dominic N likes this.

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