Land developers assail government control

Claim government stranglehold is potentially dangerous.

Hong Kong developers are urging the government to relax its new and tough rules they see as a government takeover of the real estate industry.

“The real estate market is now under direct government control, a situation which we consider is unhealthy and potentially dangerous,” claims Stewart Leung, chairman of the executive committee at the
Real Estate Developers Association of Hong Kong (REDA).

“We would respectfully advise against taking any measures for the sake of short-term expediency at the cost of risking Hong Kong’s hard-earned reputation.”

REDA said the two real causes of spiraling real estate prices are Hong Kong’s currency peg to the U.S. dollar and a shortage of land supply and not the rising number of real estate deals.

REDA represents developers including Cheung Kong (Holdings) Ltd., Sun Hung Kai Properties Ltd., New World Development Co. and Henderson Land Development Ltd.

In October, the government imposed its most stringent set of property rules that include a 15% tax on non-local and corporate homebuyers. The measures seek to ease risks of a real estate bubble after home prices doubled in almost four years on record low interest rates and the influx of buyers from mainland China.

REDA also suggests the government help first-home buyers by waiving a stamp duty and relaxing the loan-to-value ratio of their mortgages to as much as 90%.

A typical 600 square foot apartment in Hong Kong costs some HK$5.4 million, or HK$9,000 per square foot, according to estimates by realtor Midland Holdings Ltd.