In a stunning reversal, two of Hong Kong's biggest property developers
have caved in to intense public pressure and decided not to demolish
the seven-tower Hung Hom Peninsula residential complex.
The developers, NWS Holdings and Sun Hung Kai Properties, issued a
joint statement on Friday acknowledging that the decision to tear down
the never-occupied project to make way for luxury flats had generated
significant controversy and "caused discord in the community".
Facing a possible legislative inquiry into the matter and government
insistence that the master layout plan for the project would still
have to be followed after demolition, the developers said they would
"explore unit renovation and reconfiguration" of the almost
2500-units as an alternative.
The about face is almost unheard of in Hong Kong, where the private
sector and especially large developers generally win any battle
over property rights.
The idea that perfectly good buildings would simply be demolished in
order to make way for luxury flats at a massive profit for developers,
however, proved to be too much even for Hong Kong.
Democrat lawmaker Cheung Man-kwong called the decision a victory for
the people. "The developers have listened to the public and stopped
committing a big mistake," he said.
Legislative Council housing panel chairman Cham Kam-lam welcomed the
decision but said an investigation into the deal between the
government and the developers would continue. "The panel has just
received documents from the government concerning the Hung Hom
Peninsula. We will study the documents carefully to decide whether to
convene a special meeting," he said.
NWS Holdings managing director Henry Cheng denied the government
intervened in the decision. "We have not encountered any pressure,"
"I hope that we can sell the building after renovation. The profit
will drop a little bit, but we can sell the building after several
months. It is possible and acceptable to keep the buildings and
renovate them for sales."
In their statement, the developers noted that the controversy, if
allowed to fester, could undermine their position in the territory.
The companies said through a spokesman that they "do not want to
precipitate an assault on private property rights and freedom of
contract, as this would impair the business environment in a free
economy. The two developers place great emphasis on community
The harbour-view flats were originally built under the government's
abandoned Private Sector Participation Scheme, a programme intended to
provide affordable housing for middle class residents. Fears by
wealthy land owners and developers that the scheme would erode
property values led the government to abandon subsidised housing
altogether in 2002.
Earlier this year the Hung Hom project was sold to NWS Holdings and
Sun Hung Kai for a below-market land premium of HK$864 million.
If sold as is, it has been noted, the developers would have fetched a
HK$1 billion profit.
But with the current rebound in the property market, real estate
analysts say the value of the property has risen to HK$6 billion and a
resale to the government now would earn developers a profit of at
least HK$2 billion. Had the site been demolished and converted to
luxury use, it is estimated the developers would have made about HK$6
The developers were careful on Friday to assert their legal right to
do whatever they wanted with the property and they admitted no
wrongdoing in the affair.
"The two developers have acted entirely within their legal and
contractual rights at every stage of their dealings with Hung Hom
Peninsula," a spokesman said. "The decision to change the demolition
plan was made after taking into account prevailing circumstances and
listening to public opinion.
"We have tried to be understanding and balance all interests with
The spokesman said the developers' priority as public companies was to
make money for their shareholders.
Friday's decision to renovate and enhance without tearing the
structures down, the statement said, "could produce a profit in a
shorter period of time and avoid taking an investment risk for three
to four years".
Secretary for Housing, Planning and Lands Michael Suen welcomed the
"I believe that members of the public will be delighted," he said.
"It is also in line with the original intent of the agreement reached
between the government and the developer in the lease modification
completed earlier in the year." But he noted that apart from
delivering a written statement to the developers to oppose their plan,
he had not approached either or brought any pressure to bear on them.
NWS Holdings corporate communication manager Kwan Chak-fai, conceded
that the public response to the demolition plan had been far greater
than was expected.
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