Flat buyers smell scam in UK projects

Finance | Dominique Nguy 20 Jun 2016

As more Hong Kong people are investing in overseas properties, there could be risks involved - even if the projects are located in developed countries like Britain.

A group of 60 buyers protested at Wan Chai police headquarters at the weekend to demand cooperation with British police to investigate a potential scam involving unfinished presale overseas properties in Bradford and Manchester.

An estimated 200 locals had bought presale flats at five projects in Bradford and Manchester, being built by a British developer - Absolute Living Development - in 2014. One of the projects was called Olicana House. The purchases were made through a local agency known as Hong Kong Homes.

Some projects were supposed to be completed in the second half of 2015. However, Absolute Living Development was wound up in February, and representatives of the projects disappeared. Some buyers visited a construction site and discovered there was no building there.

After the developer folded, the real estate agency suggested buyers make the remaining payments to "save" the project. The buyers then found out the developer transferred 85 percent of the proceeds to a creditor, and some people were board members of both companies. The buyers suspected a scam.

Lawmaker James To Kun-sun said about 200 to 500 buyers were involved and had either paid in full or a 50 percent deposit.

To estimated each buyer stood to lose around HK$500,000, with the total sum possibly reaching HK$150 million.

One of the buyers said agents told them in 2014 the rental return was guaranteed to be 8 percent for the first four to five years after completion.

The buyer further alleged the developer arranged for lawyers from Britain to explain property deeds, and he believed in Britain¡¦s legal system. However, To said there are no laws to supervise the sale of overseas properties in Hong Kong.

David Hui, sales director of Centaline Property project department (China & Overseas), said buyers need to be wary of developers launching presale projects for the first time.

Police said 24 complaints were received involving HK$8.38 million on Saturday. The case will be followed up by the Commercial Crime Bureau.

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