39 Conduit Road
Encyclopedia
39 Conduit Road is a residential property situated in Conduit Road
in western mid-Levels
of Hong Kong. It is a prestige development by Henderson Land Development
.
Soon after the development was launched in October 2009, the developer claimed to have sold a five bedroom duplex flat, on the "68th floor" of the 46-storey building for HK$
439 million (US$57m). The price, equating to US$9,200 per square foot, set the new world record for the most expensive apartment.
There were criticisms of deceptive marketing in which the developers launched the project omitting 42 intermediate floor numbers. The development was once again the subject of controversy when only one sale had been completed within the commonly accepted three-month completion period; and all but four transactions, including the record-setting sale, were later cancelled.
The developer gives the gross floor area at approximately 229255 ft2, comprising a single tower with 6-storey podium car park, 1-storey club house and 39 residential floors. The development provides 66 residential units and 104 car parking spaces; its 66 units range in size, from 2800 ft2 to about 7600 ft2.
through a locally registered company. A second unit on the same floor fetched HK$397 million or HK$64,605 psf.
It is Asia's most expensive property, according to the World Records Academy - the previous world record was set in London, where a flat in One Hyde Park
was sold for US$9,585 per square foot. The previous Asian record was set in June 2008, when Sun Hung Kai Properties sold a 5497 ft2 penthouse at The Arch for HK$41,100 per square foot. The record price set off concerns about a property bubble, and talk of the possibility of liberalising the supply of building land from the government. Experts, however, disagreed that there was any bubble, saying that property of this type was not representative of the mass housing market.
The chairman of another developer, Hang Lung Properties
, expressed scepticism over the square foot price achieved, but the Henderson chairman insisted the price was real. Henderson admitted that the buyer of the record-breaking flat bought six units, whilst the South China Morning Post
reported an unnamed source which said all 24 units were bought by the same individual. The SCMP noted that all 24 flats sold on the first day were bought by BVI
-registered shell companies, and were handled by the same firm of solicitors. Market scepticism of the record prices achieved were due principally to the apparent over-valuation — the average price achieved was $40,000/sf, said to be at least 50 percent higher than an equivalent property nearby on Robinson Road according to estate agencies; a typical property would yield gross rental of two percent, compared to the market average of five. In May 2010, after having paying HK$1.82 billion for a plot of land on the Peak for the family residence, Lee Shau-kee admitted his son had considered the penthouse at the development, but was deterred by the asking price.
accused the developer of misleading the public; Albert Ho
, its chairman, said "..This is a classic incident to show how powerful big developers are in Hong Kong." The Consumer Council recognised the accepted common practice of skipping the 13th and 14th floors, but suggested that developers "imaginary heights brought back to earth." Henderson said that the floor numbers omitted are in line with information in sales brochures and were not inconsistent with the approved building plans and the occupation permit. Its chairman, Lee Shau-kee, said "buyers like those numbers and we aren't cheating them."
The New York Times
noted that Hong Kong has had many controversies over whether developers have overstated the square footage of apartments and the value per square foot of property transactions, for example, how to count terraces, common areas and other features. An editorial in Ming Pao
said: "Though developers have used controversial marketing gimmicks, the government has rarely exercised its powers to protect consumers. Citizens disapprove of developers. Many are convinced that some government policies are excessively favourable to them. That is why the generality of citizens have the impression that the government colludes with businesses."
On 15 June, Henderson's announcement that all but four of the 24 properties at the development sold in October for record prices had been cancelled was met by uproar. Henderson said that "there was nothing untransparent", and that failure to complete was "very standard" in the industry, and the buyers' initial deposits had been forfeited. The company said the properties would be remarketed. The government has pledged to follow up on the transactions. Current regulations in force are not codified, and are in the form of a voluntary code of conduct agreed with the Property Developers' Association. The revelations, as well as on-going complaints that property sales lacked transparency and allegations of the government's collusion with officials, are putting the government under increasing pressure to enact legislation governing property transactions and render property sales practices more transparent, at the risk of angering at the city's powerful developers. The only four flats to complete were on the 30th and 31st floors, and had sold for between only HK$37,800 and HK$40,900 a square foot–less than half of the 'record. Combined with the fact that the cancelled deals were all transacted through BVI shell companies, like the law firm which handled the conveyancing, cast suspicion that they were bogus; Lee maintained they were genuine and was prepared to wager 100:1 should the deals be proven false. The Hong Kong Institute of Surveyors said the sale cancellation had done "serious damage to the developer's image and integrity"; legislators from across the political spectrum called for an investigation and further action to deal with market abuses.
Conduit Road
Conduit Road is a road in the Mid-Levels on Hong Kong Island in Hong Kong.-The road and buildings:Conduit Road was constructed in 1910. It is located in Western Mid-Levels. It is named after the aqueduct passing underneath which carries water from the Pok Fu Lam Reservoir to the Central area. It is...
in western mid-Levels
Mid-levels
Mid-levels is an expensive residential area on Hong Kong Island in Hong Kong. It is located halfway up Victoria Peak, directly above Central...
of Hong Kong. It is a prestige development by Henderson Land Development
Henderson Land Development
Henderson Land Development Co. Ltd. is a listed property company and a constituent of the Hang Seng Index. The company's principal activities are property development and investment, project management, construction, hotel operation, department store operation, finance, investment holding and...
.
Soon after the development was launched in October 2009, the developer claimed to have sold a five bedroom duplex flat, on the "68th floor" of the 46-storey building for HK$
Hong Kong dollar
The Hong Kong dollar is the currency of the jurisdiction. It is the eighth most traded currency in the world. In English, it is normally abbreviated with the dollar sign $, or alternatively HK$ to distinguish it from other dollar-denominated currencies...
439 million (US$57m). The price, equating to US$9,200 per square foot, set the new world record for the most expensive apartment.
There were criticisms of deceptive marketing in which the developers launched the project omitting 42 intermediate floor numbers. The development was once again the subject of controversy when only one sale had been completed within the commonly accepted three-month completion period; and all but four transactions, including the record-setting sale, were later cancelled.
Configuration
Henderson chairman Lee Shau-kee, who originally owned 60 percent equity of the site of the luxury building, sold it to the company for HK$1.75 billion or HK$12,759 psf. The project has 45 storeys above ground.The developer gives the gross floor area at approximately 229255 ft2, comprising a single tower with 6-storey podium car park, 1-storey club house and 39 residential floors. The development provides 66 residential units and 104 car parking spaces; its 66 units range in size, from 2800 ft2 to about 7600 ft2.
Selling strategy
The developer announced it would sell 40 percent of the units in 2009. Two duplexes on the "66th floor" the building were listed - the 5636 ft2 unit was price-tagged at HK$357.7 million, and the 5131 ft2 unit is listed at HK$311.4 million. Prior to the launch, Henderson has suggested it might ask HK$100,000 psf for the two penthouses on the "88th floor" not on the initial sale list.World record price
One 6158 ft2 duplex apartment, the larger of two on the "68th floor" the building, has its own ballroom, outdoor swimming pool, fitness centre and outdoor patio. The headline price of HK$71,280 per square foot was achieved. The definition of the floor area is unlike that in most other real estate markets; usable living space which includes the 340 ft2 garden, and its share of communal areas. Based on a more common international measure, the square foot price would be about HK$88,000, or US$11,350. According to the developer, it was sold to an unnamed buyer from mainland ChinaMainland China
Mainland China, the Chinese mainland or simply the mainland, is a geopolitical term that refers to the area under the jurisdiction of the People's Republic of China . According to the Taipei-based Mainland Affairs Council, the term excludes the PRC Special Administrative Regions of Hong Kong and...
through a locally registered company. A second unit on the same floor fetched HK$397 million or HK$64,605 psf.
It is Asia's most expensive property, according to the World Records Academy - the previous world record was set in London, where a flat in One Hyde Park
One Hyde Park
One Hyde Park is a major residential and retail complex located in London, United Kingdom. The development includes three retail units totalling and 86 residential properties marketed with prices starting at around £20 million...
was sold for US$9,585 per square foot. The previous Asian record was set in June 2008, when Sun Hung Kai Properties sold a 5497 ft2 penthouse at The Arch for HK$41,100 per square foot. The record price set off concerns about a property bubble, and talk of the possibility of liberalising the supply of building land from the government. Experts, however, disagreed that there was any bubble, saying that property of this type was not representative of the mass housing market.
The chairman of another developer, Hang Lung Properties
Hang Lung Properties
Hang Lung Properties , formerly Amoy Properties and parented by Hang Lung Group, is a Chinese real estate company with its headquarters in Hong Kong. It is a member of Hang Seng Index Constituent Stocks ....
, expressed scepticism over the square foot price achieved, but the Henderson chairman insisted the price was real. Henderson admitted that the buyer of the record-breaking flat bought six units, whilst the South China Morning Post
South China Morning Post
The South China Morning Post , together with its Sunday edition, the Sunday Morning Post, is an English-language Hong Kong newspaper, published by the SCMP Group with a circulation of 104,000....
reported an unnamed source which said all 24 units were bought by the same individual. The SCMP noted that all 24 flats sold on the first day were bought by BVI
British Virgin Islands
The Virgin Islands, often called the British Virgin Islands , is a British overseas territory and overseas territory of the European Union, located in the Caribbean to the east of Puerto Rico. The islands make up part of the Virgin Islands archipelago, the remaining islands constituting the U.S...
-registered shell companies, and were handled by the same firm of solicitors. Market scepticism of the record prices achieved were due principally to the apparent over-valuation — the average price achieved was $40,000/sf, said to be at least 50 percent higher than an equivalent property nearby on Robinson Road according to estate agencies; a typical property would yield gross rental of two percent, compared to the market average of five. In May 2010, after having paying HK$1.82 billion for a plot of land on the Peak for the family residence, Lee Shau-kee admitted his son had considered the penthouse at the development, but was deterred by the asking price.
Power of developers and controversy over deceptive marketing
Due to the meaning of numbers in Chinese culture, "auspicious" numbering system was adopted by the developers, where the top floor was "88" - Chinese for double fortune. It is already common in Hong Kong for ~4th floors not to exist; there is no requirement by the Buildings Department for numbering other than that it being "made in a logical order." A total of 42 intermediate floor numbers are omitted from 39 Conduit Road: those missing include 14, 24, 34, 64, all floors between 40 and 59; the floor number which follows 68 is 88. The Democratic PartyDemocratic Party (Hong Kong)
The Democratic Party is a pro-democracy political party in Hong Kong. It was established on 2 October 1994. The party is currently the second largest party in the Legislative Council, headed by Chairman Albert Ho Chun-yan and, following the November 2008 merger with the Frontier, had around 745...
accused the developer of misleading the public; Albert Ho
Albert Ho
Albert Ho Chun-yan . He is currently secretary general of the Hong Kong Alliance in Support of Patriotic Democratic Movements in China and chairman of the Democratic Party. He is a solicitor and a member of the Legislative Council of Hong Kong....
, its chairman, said "..This is a classic incident to show how powerful big developers are in Hong Kong." The Consumer Council recognised the accepted common practice of skipping the 13th and 14th floors, but suggested that developers "imaginary heights brought back to earth." Henderson said that the floor numbers omitted are in line with information in sales brochures and were not inconsistent with the approved building plans and the occupation permit. Its chairman, Lee Shau-kee, said "buyers like those numbers and we aren't cheating them."
The New York Times
The New York Times
The New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...
noted that Hong Kong has had many controversies over whether developers have overstated the square footage of apartments and the value per square foot of property transactions, for example, how to count terraces, common areas and other features. An editorial in Ming Pao
Ming Pao
Ming Pao is a Chinese language newspaper published by Ming Pao Group in Hong Kong. In the 1990s, Ming Pao established four overseas branches in North America, each provides independent reporting on local news and collect local advertisements. Currently, only the two Canadian editions remain: Ming...
said: "Though developers have used controversial marketing gimmicks, the government has rarely exercised its powers to protect consumers. Citizens disapprove of developers. Many are convinced that some government policies are excessively favourable to them. That is why the generality of citizens have the impression that the government colludes with businesses."
Delayed completions controversy
As at the end of March 2010, Land Registry records show only one flat has been completed on, giving rise to concerns that the developer might have released misleading information. An editorial in the SCMP said greater transparency for property deals is needed: "Unusual sales transactions at 39 Conduit Road [...] call for closer scrutiny of the property market by the authorities. It does not appear that the developers have broken any law. But [...] have given rise to allegations they were seeking to manipulate the market." A reply from Henderson to the Lands Department of 24 March, which said it had entered into a verbal agreement with the 24 buyers to extend the transaction date for two to four months, subject to further extension, was not considered satisfactory by the Finance Committee of Legislative Council, which pressed the Lands Department to summon senior management of Henderson Land to explain in person why the sales of 24 flats in the development could not be completed five months after they were purportedly sold. Following the response, which was not made public, the Lands Department made a second request for more information from the developer; a four-page response was received, in which Henderson explained it allowed the buyers, all unconnected with Henderson, to extend the transaction deadline after the Hong Kong Monetary Authority issued a notice on 23 October to banks to reduce lending to finance purchase of luxury homes. The Standard reported that the Lands Department remain unsatisfied with why there was only oral agreement on the deferrals.On 15 June, Henderson's announcement that all but four of the 24 properties at the development sold in October for record prices had been cancelled was met by uproar. Henderson said that "there was nothing untransparent", and that failure to complete was "very standard" in the industry, and the buyers' initial deposits had been forfeited. The company said the properties would be remarketed. The government has pledged to follow up on the transactions. Current regulations in force are not codified, and are in the form of a voluntary code of conduct agreed with the Property Developers' Association. The revelations, as well as on-going complaints that property sales lacked transparency and allegations of the government's collusion with officials, are putting the government under increasing pressure to enact legislation governing property transactions and render property sales practices more transparent, at the risk of angering at the city's powerful developers. The only four flats to complete were on the 30th and 31st floors, and had sold for between only HK$37,800 and HK$40,900 a square foot–less than half of the 'record. Combined with the fact that the cancelled deals were all transacted through BVI shell companies, like the law firm which handled the conveyancing, cast suspicion that they were bogus; Lee maintained they were genuine and was prepared to wager 100:1 should the deals be proven false. The Hong Kong Institute of Surveyors said the sale cancellation had done "serious damage to the developer's image and integrity"; legislators from across the political spectrum called for an investigation and further action to deal with market abuses.
External links
- http://www.39conduitroad.com.hk Official website for the development