Wednesday, 15 May 2013

HK's Superman Foiled Again

Li Ka-shing suffered a blow this time, but he will be back for sure
It hasn't been a good few weeks for Li Ka-shing and his company Cheung Kong Holdings. First it was the 40-day dock workers' strike and now his brilliant plan of exploiting a loophole and selling hotel suites as individual units was cancelled after Hong Kong's securities regulator started an investigation into the transactions.

The latest blow came a few days ago when the Securities and Futures Commission found the deals in February that totalled HK$1.4 billion ($180 million) in sales breached the law as unauthorized investments.

As a result Cheung Kong will begin refunding deposits plus any partial payments including 2 percent interest to buyers.

However things are going to get even more complicated for those buyers who sold the suites to other people.

That's because some sub-sale agreements include the phrase "the parties must complete the sales and purchase". And so because the deal did not go through, some sellers would have to return 10 percent deposit plus an extra 10 percent of the property price to the second buyers as compensation. And then there are legal bills on top of it.

In other words this whole incident is a complete mess.

Of course Li will blame his wily staff for this oversight, but at the time they claimed they spent over a year checking to see if the sale of the individual hotel suites would be legal.

And now that they're not, Cheung Kong has to retreat with its tail between its legs.

We are pleased the government has finally found a way to shut down the sale, but sorry the buyers will be screwed over by this deal that seemed too good at the time. We thought it was a strange sale and had too many questions that weren't fully answered.

The incident only proves how people -- both Hong Kong and mainlanders -- are keen to buy property -- almost anything -- to get into the market.

And we know Li will be back with more creative ideas to lure potential buyers into the market because he knows demand is there. However we hope this is a lesson for people to think twice about Li's ventures. Not everything is as they seem in reality...

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