|Cheung Kong's Justin Chiu Kwok-hung sells out Apex Horizon hotel|
Earlier this week his company Cheung Kong sold all 360 units of the Apex Horizon hotel in Kwai Chung, exposing a loophole allowing a hotel to be sold in parts.
Buyers snapped up the units because they were sold as commercial properties and so they were not subjected to the stamp duty, and for non-local buyers the additional 15 percent.
As a result, units were sold at HK$5,200 ($670) per square foot, compared to over HK$8,000 per square foot in nearby flats.
While the Hong Kong government threatens to take over the site if the land lease regulations were violated, it seems the authorities are powerless to do anything to regulate the sale that is already done and dusted.
"I hope the public understands that the sales involved are not residential units... I have urged the Lands Department to look at how many hotels are eligible for partial sales," said Paul Chan Mo-po, Secretary for Development.
It was not until July 2003 that the government specified in land leases that hotels could only be sold as a whole and not piecemeal. And in this case the Kwai Chung hotel was approved before that date.
Meanwhile the executive director of the Hong Kong Hotels Association James Lu Shien-hwai said the hotel's license could be breached if the rooms were occupied by buyers, using it for residential use.
And in order to monitor this, inspectors would have to make daily checks on the identity of each occupant which would be completely unfeasible.
Cheung Kong executive director Justin Chiu Kwok-hung reminded buyers that the hotel may not allow cooking and that changing furniture would need management approval.
He added the company had spent more than a year studying the land lease and deed of mutual convenant of Apex Horizon as well as the Hotel and Guesthouse Accommodation Ordinance on how to manage the property before putting the units up for sale.
It seems most of the buyers are looking at the units as investment or to speculate. Are people that crazy about wanting to park their money somewhere or was it too good of a deal to pass up despite the pending consequences?
We are a bit confused here -- so can buyers live in their own hotel unit? If so it seems they will not be allowed to cook or change the furniture. Or is this like a time share where they allow the hotel company to rent out the room to guests for them?
It appears this is a grey area here that needs to be resolved and the government needs to solve it quickly.
We are quite amused by how the government was caught flat-footed on this incident and that Li has outsmarted everyone yet again.
Though we have to say we are not pleased with how he treats his employees.
We heard today through someone whose friend works for Watson's that for Chinese New Year, Li-owned companies hand out lai see envelopes -- but they have nothing inside -- except for a piece of paper wishing the person a happy new year. And for the annual company dinner, staff are expected to go on stage to perform in a talent show as the firm is too cheap to hire entertainment.
No wonder Li is worth $30 billion according to Forbes...