HONG KONG: Henderson Land Chairman Lee Shau-kee has responded to the government's call for improving order in the real estate market by promising to curb the practice of skipping floors in property development floor numbering.

He also offered explanations of the controversial numbering of floors in a new luxury residential project in Mid-Levels.

One of the main criticisms was that a 46-story building has a floor described as the 88th floor, which critics, including legislators, complained was misleading.

Lee said his company, one of the largest developers in Hong Kong, has followed the proper procedures with the government and received government approval before selling the flats, including permission to also call the 46th floor the 88th floor.

He pointed out that property developers commonly skip floors as customers prefer floors with lucky numbers. However, he said his company will skip fewer floors in future projects.

Referring to the selling price at over HK$70,000 per square feet, which some people feared was fabricated, Lee confirmed the price was definitely as high as reported. "Some buyers are really rich, as wealthy as some of Hong Kong's richest," he said, adding that wealthy buyers like to buy strong brands, "much like ladies shop for designer handbags".

The Henderson chairman said the high prices for luxury flats are boosting the economy, but will not affect medium-sized flats. He expects property prices will rise by 10 to 20 percent next year.

In a demonstration of confidence in the property market, which has caused so much controversy recently, Henderson Land announced it has agreed to pay a record HK$9.6 billion for a large piece of residential land which it will develop jointly with New World Development.

Henderson Land and New World Development will accept a government request for HK$9.6 billion premium to change the use of land the companies own in Wu Kai Sha in the suburban New Territories. The sum is the largest in recent years.

The two developers plan to build 2.95 million square feet of buildings. The premium for each square feet is about HK$3,200.

The companies' negotiation with the government lasted for about three years. The HK$9.6 billion premium agreed was higher than what the government originally proposed, against which Henderson previously appealed.

But as property prices continued to go up, the HK$9.6 billion figure was finally agreed upon. The last time the government received a similarly high sum for a land premium was for a piece of land in Tseung Kwun O that netted over HK$8 billion.

Market experts said the land premium price Henderson pays is reasonable, and will add confidence to the real estate market.

(HK Edition 10/30/2009 page3)