Hong Kong Adopts Guidelines on Property Marketing

By JONATHAN CHENG

HONG KONG – Notoriously aggressive marketing tactics for Hong Kong residential property that helped turn the 46th floor of a landmark development into the 88th floor will soon be toned down.

Under new government guidelines, real-estate developers here will have to clearly state the floor number and square footage of condominium units in their sales materials.

"The government is deeply concerned about some recent sales tactics in the first-hand uncompleted residential property market and confusing market information," a government spokesman said Friday. "The new measures will further enhance the transparency of transactions ... and the clarity of property information."

Associated Press

New guidelines in Hong Kong require developers to clearly state the floor number and square footage of condominium units, after one builder represented the 46th floor of a landmark development, shown above, as the 88th floor.

Last month, blue-chip developer Henderson Land Development Co. said it sold a unit in its luxury condominium, 39 Conduit Road, for about US$56.6 million. The unit, which was marketed as sitting on the 68th floor of the building, was actually on the 44th floor.

The building's floor numbering plan skipped scores of numbers deemed to be inauspicious (those containing the number four, for example, which sounds like a Chinese word for death) and highlighted the ones considered lucky (such as ones containing eight, which sounds like a word for prosperity). The top floor of the 46-story building is called the 88th floor.

Now, the government says developers will have to "set out the floor numbering information clearly" in the front of their sales brochure.

The government also focused on how big developers say an apartment is. Typically, Hong Kong's developers include each unit's share of the public hallways, air conditioning units and the gym and spa in quoting its gross floor area to homebuyers. Developers don't always report the so-called "saleable," or usable, square footage of the apartment -- which includes only the unit itself, plus any extra balcony or utility areas.

Under the government's new measures, which it announced Friday in conjunction with the Real Estate Developers Association of Hong Kong, developers will have to show the per-square-foot price of individual flats, using saleable area.

At 6,158 square feet, the apartment at 39 Conduit Road sold for US$9,200 per square foot. After stripping out the extras, the condo is only 4,671 square feet, which works out to over US$12,000 per square foot.

A Henderson spokeswoman said that the developer would comply with any guidelines issued by the Real Estate Developers Association. Previously, Henderson Chairman Lee Shau Kee said the numbering of 39 Conduit Road was a response to market demand.

Under the government's new arrangements, developers will also have to disclose information about primary market transactions more quickly, within five days instead of the current period of one month.