Hong Kong’s incredible shrinking flats revealed
Olga Wong and Joyce Ng
SCMP Sep 27, 2009
Buyers of flats in Hong Kong are getting less and less for their money as common areas included in the floor area quoted by developers eat into their living space.
Because of this practice – described by the head of a leading property agency as a “trick” to lower flats’ price per square foot – their actual size has shrunk by as much as 22 per cent since the 1980s. For example, a new flat listed as being 700 sq ft has only as much space as a 530 sq ft flat built in the 1980s.
In many cases buyers do not know what common areas they are paying for. While price lists and sales brochures list lift lobbies and clubhouses as examples of common areas, others are never disclosed. They include architectural features, planters, space for watchmen, rooftops, pathways to car parks and covered walkways, say architects and surveyors who have worked in the field for more than 20 years.
Some developers are even charging buyers for “green” features the government has exempted from a building’s gross floor area in an effort to make developments more environment-friendly.
The efficiency rate of new flats – gross floor area divided by internal floor area – is as low as 68 per cent.
Shih Wing-ching, chairman of property agency Centaline Holdings, described the practice as a developers’ trick to lower the apparent price of the flat.
“The larger the flat’s size, the lower the per-square-foot price,” he said.
Consumer Council chief executive Connie Lau Yin-hing said it was time to tell consumers exactly what they were buying.
“After all, buyers expect to pay only for what they can enjoy, and they need to pay for the maintenance of the common areas too,” Lau said.
The Sunday Morning Post commissioned a study of the efficiency rates of 23 housing estates built since 1980. The estates covered were built by several big developers, and include the city’s 10 biggest residential developments.
Data collected from developers, banks and the Rating and Valuation Department show the efficiency rates of estates built in the 1980s – including Taikoo Shing in Eastern district, and Whampoa Garden and Telford Garden in Kowloon – are as high as 90 per cent, meaning a flat’s internal floor area is 90 per cent of its gross floor area. (Gross floor area – a flat’s interior plus an apportioned share of common areas – is crucial because developers and buyers alike base their calculation of a flat’s price per square foot on it.)
The efficiency rate began to drop in the 1990s, when it fell to around 80 per cent, and the trend has continued. Flats built in the past 10 years are only 70 to 75 per cent efficient. The rate is even lower on some of the newest estates. At Victoria Towers in Tsim Sha Tsui, developed by Cheung Kong (Holdings), the rate is as low as 68 per cent; at Island Resort in Chai Wan, developed by Sino Land, it is as low as 69 per cent.
Using the latest definition for saleable area endorsed by the government, the efficiency rates of estates sold this year are just above 70 per cent.
It ranges from 71 per cent to 73 per cent for the flats of Silver Lake at Wu Kai Sha, in the northeastern New Territories; at Le Prestige in Lohas Park, part of the new town of Tseung Kwan O, the rate is 75 per cent. If balconies and utility platforms are taken out of the calculations, the efficiency rates at these estates are between 68 per cent and 72 per cent.
While the government has endorsed guidelines issued by the Real Estate Developers Association concerning the definition of a home’s saleable area, no attempt has been made to standardise the meaning of gross floor area.
The government and the association admit there is no standardised definition of gross floor area, meaning developers are free to include whatever they want in a building’s common area. Although developers are now required to inform buyers about the amount of common area included in a flat’s gross floor area, they are not required to provide an exhaustive list of the common area’s constituent parts.
Common areas account for as much as 22 per cent of gross floor area in newly completed estates, our research shows.
“Having controlled the saleable area, it’s time for the next step,” said Raymond Chan Yuk-ming, chairman of the public and social affairs committee of the Hong Kong Institute of Surveyors.
He proposes limiting the types of common area that can be included.
“It would be more reasonable if owners were asked to pay for facilities that they really appreciate and enjoy,” he said.
Louis Loong Hon-biu, secretary general of the developers association, said common facilities add value to estates and therefore to flats.
Shih, of Centaline, said the government should set a definition of gross floor area.
Developer Swire Properties said it would welcome a standardised definition of gross floor area since it would enhance transparency and consistency.
A spokeswoman for Cheung Kong (Holdings) said the company followed association guidelines.
Despite the controversy, owners who buy flats “off plan” – meaning before they are built – and only find out later how small they are seldom complain.
Sai Kung district councillor Chan Kai-wai said he had received complaints about flats sold in Tseung Kwan O, but the buyers refused to talk to the media.
“Who would undermine the resale value of their own property,” he asked.
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