Real Estate Services Committee

	7 December 1998
	14 July 1998
	16 March 1998
	18 February 1997

Minutes of a meeting of the HKCSI Real Estate Services Committee held on 7 December 1998 at 9:00am at the Chamber Conference Room.

Chairman:

Mr Nicholas Brooke, Brooke International

Present:

	Mr Tony Chan, Tony T N Chan Surveyors International Ltd
	Mr Michael Choi, Land Power International Holdings Ltd
	Mr Andrew Lee, The Hong Kong Institute of Architects
	Mr Peter Lee, Jones Lang Wootton
	Mr Mak Nak Keung, Sun Hung Kai Properties Ltd
	Ms June Teng, The Real Estate Developers Assn of HK
	Dr W K Chan, Secretary General
	Ms Charlotte Chow, Deputy Secretary

Apologies:

	Mr C K Lau, Henderson Real Estate Agency Ltd
	Mr Lawrence Mak, Hong Kong Island Development Ltd
	Mr Michael Moir, Swire Property Ltd
	Mr Phillip Nourse, Chesterton Petty Ltd
	Mr Hugh Wu, Gammon Construction Ltd

Out of town:

	Ms Catherine Chong, Wilkinson & Grist
	Mr Jason Sze, A J Mason Development Ltd

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The Chairman welcomed Mr Peter Lee of Jones Lang Wootton to his first meeting.

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Minutes of the meeting held on 14 July 1998 were confirmed and signed.

Home Ownership Scheme

2.1 According to Ms Teng, REDA members felt that in the long term, the government¡¦s role should be the provision of rental units rather than selling of flats. Members agreed that in principle, in the long term the government should provide assistance through loan schemes rather than through HOS. However, members¡¦ views were divided on whether a small proportion of HOS should be kept as part of the housing structure. Mr Choi cautioned that the abolition of HOS might result in a volatile market which might induce the government to take drastic steps.

2.2 Members were unanimous of the view that the present supply of HOS flats is excessive and the number should be reduced gradually. Mr Choi suggested that a reasonable number should be in the region of 10-12,000. At the same time, the criteria on income for applicants should be brought down.

2.3 Members agreed that there should be a mechanism to restrict the length of occupancy of government rental housing units for those who are no longer in need of subsidizied housing.

Financial Assistance

2.4 It was pointed out that there would be a cost implication on government loan schemes. On the other hand, loan schemes would also generate cost savings in terms of higher income from land sales for land which would otherwise have been used for HOS or PSPS.

2.5 The concept of building society/housing bank as in the UK was suggested. Under the system, people were encouraged to put their savings into the building societies eventually for the purchase of property. Both savings and loans of building societies would carry preferential rates.

2.6 It was proposed that a central body could be set up for administering housing issues in Hong Kong with the Housing Authority and the Housing Society as its agents. It was felt that the various forms of housing loans should be rationalized.

2.7 Members were supportive of the recent measure to effectively increase loan level from 70% to 85% for users on the basis that this reflected a corrective measure rather than an increase in government intervention. It would be helpful if procedures could be simplified. Tentatively, it was agreed, it should be left to the banks to decide on the level of loan in a stable market.

Land Sale Moratorium

2.8 Ms Teng reported that REDA members concurred with the government to review sales of residential land in early 1999. She added that the sale should be gradual and market and economic factors should be taken into consideration before making any decision.

2.9 Some members sensed that the public would not favour tendering of land but would prefer open auction. Members agreed it would be crucial for the first land sale after the recess to be successful. The sale should thus be conducted carefully to avoid any misunderstanding from the government of the response from developers. It was suggested that a process combining bidding and tendering could be adopted such as requiring interested bidders to indicate a upset price. The government could test the market by putting up a selected number of smaller plots of residential land for sale and inviting expression of interest from developers. If the offering price matched with government estimation, the land could be auctioned.

Urban Renewal

2.10 The Chairman commented that the current situation was tough for the Land Development Corporation to continue its urban renewal projects. With people being made homeless during the process, he felt that urban renewal was a social issue and any renewal project should be both economically and socially viable. Members felt that with its social role, the LDC should not aim to be a profit-making organization.

2.11 Developers were keen to see the speeding up of land resumption to create land supply. It was felt that the government should make land resumption easier if the subsequent development was economically and socially viable.

2.12 It was suggested that officials from the Planning, Environment and Lands Bureau be invited to discuss with members the various issues.

Mr Mak said that Hong Kong continued to be quoted as an expensive city in terms of rental of commercial space. He felt that as rents had been brought down substantially in the past months, the competitiveness of Hong Kong should be conveyed to the international arena.

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There being no other business, the meeting adjourned at 10:20 am.

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Secretary	Confirmed	Chairman
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Minutes of a meeting of the HKCSI Real Estate Services Committee held on 14 July 1998 at 4:30pm at the Chamber Boardroom.

Chairman:

Mr Nicholas Brooke, Brooke Hillier Parker

Present:

	Mr Tony Chan, Tony T N Chan Surveyors International Ltd
	Ms Catherine Chong, Wilkinson & Grist
	Mr C K Lau, Henderson Real Estate Agency Ltd
	Mr Andrew Lee, The Hong Kong Institute of Architects
	Mr Mak Nak Keung, Sun Hung Kai Properties Ltd
	Mr Tim J Mills, Sino Land Company Limited
	Mr Phillip Nourse, Chesterton Petty Ltd
	Dr W K Chan, Secretary General
	Ms Charlotte Chow, Deputy Secretary

By invitation - Chamber Economic Services Committee:

	Mr Hilton Cheong-leen, H Cheong-Lee & Co Ltd
	Ms Sin Yue Duk, Standard Chartered Bank

Absent:

Mr Peter Lee, Jones Lang Wootton

Apologies:

	Mr Michael Choi, Land Power International Holdings Ltd
	Mr Lawrence Mak, Hong Kong Island Development Ltd
	Mr Michael Moir, Swire Property Ltd
	Mr S Y Wai, The Real Estate Developers Assn of HK
	Mr Hugh Wu, Gammon Construction Ltd

Out of town:

Mr Jason Sze, A J Mason Development Ltd

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The Chairman welcomed Mr C K Lau of Henderson Real Estate Agency Ltd to his first meeting.

Minutes of the meeting held on 16 March 1998 were confirmed and signed.

2.1 The Chairman suggested five issues for discussion. It was hoped that a position paper could be drawn up afterwards.

Do we consider / agree that government should have a long term housing strategy; and in so doing accept that it will affect the market.

2.2 After brief discussion, members agreed that a responsible government should need a long term housing strategy or a land use strategy plan which should be reviewed constantly according to circumstances of the market and be treated with flexibility. The situation was confusing recently because of the frequent changes. Besides, the issue had been politicized

Do we consider that government should seek to influence the market in order to achieve that strategy and indeed to intervene in order to achieve goals / objectives.

2.3 Members felt that having a strategy plan was already some sort of intervention. It would be difficult for government not to intervene in view of the financial turmoil and uncertainty. It was pointed out that affordability was the key.

Do we consider that the latest measures are consistent with the overall strategy and necessary in the context of the economy as a whole.

2.4 After brief discussion, it was agreed that in order to enhance the confidence of the market, the freezing of land sales for a period of nine months might be warranted. Besides, if the government had to withhold land sales because of poor response, the effect would be even worse. It was pointed out that developers could use other means for development such as conversion of land use through paying land premium.

2.5 Members commented that funding for mortgages for primary flats was not difficult to obtain, especially for smaller sums. In drawing up the strategy, the government might have focused on the demographic aspect. The liquidity and growth of the economy might have been overlooked.

How much flexibility should there be in the strategy to adjust for short term economic considerations.

2.6 It was felt that the government had not exercised enough flexibility in handling the issue. Members commented that the processing time for the assistance scheme for first time home buyers was too slow thus rendering the effect insignificant. Members were of the view that sentiment was fragile at present and because of the anticipated negative growth of the economy, people were reluctant to make substantial investments.

Is there greater scope for co-operation between public and private sectors to achieve the strategy.

2.7 Members felt that the government sandwich class scheme and the home ownership scheme were competing with the private sector. The pressure on private developers would be increased if the government continue its tenant purchase scheme. If the difference in prices between private and public housing became smaller, government subsidized housing units would become less attractive.

2.8 Members commented that the various public housing types were also competing against each other.

Others

2.9 Other issues raised by members included: banking, funding (second mortgage) and liquidity; fragility of market, economy of neighbouring countries and trading partners.

3.1 Mr Tony Chan reported that the Estate Agents Authority had just ended its consultation on licensing of agents. The EAA was arranging training sessions for trainers in August. Practitioners had however expressed concern on the strict examinations and regulations.

3.2 EAA was working with the Vocational Training Council to draw up the syllabus of training courses for agents. Nine institutions would be offering courses.

3.2 Several types of licensing arrangements had been proposed for practitioners depending on their experience and qualifications. It was anticipated that all estate agents had to be registered by the turn of the year.

3.3 The Chairman suggested that Mr Michael Choi be approached to prepare a concise progress report for members on the subject. The Secretary to liaise.

Members agreed that this would have a great impact for the real estate market and suggested that a representative from the Planning Department be invited to brief HKCSI as well as Chamber members. The Secretary to arrange.

There being no other business, the meeting adjourned at 5:50pm.

Secretary	Confirmed	Chairman
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Minutes of a meeting of the HKCSI Real Estate Services Committee held on 16 March 1998 at 4:00pm at the Chamber Boardroom.

(Secretary General Dr W K Chan told members that due to an urgent matter, the Chairman Mr Nicholas Brooke was unable to attend the meeting. Mr Brooke had suggested and members agreed to invite Mr Michael Moir to be Chairman for this meeting.)

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The Chairman welcomed new committee member Mr T J Mills and our guest Mr Tony Miller to the meeting.

Minutes of the meeting held on 25 November 1997 were confirmed and it was signed by Mr Brooke later.

2.1 Estate Agents Authority: Mr Choi reported that two meetings of the authority had been held and four sub-committees were set up. It was proposed that existing practitioners would be issued a licence in late 1998. Renewal of the licence would be subject to passing an assessment. A draft recommendation would be ready in May/June to be followed by public consultation.

2.2 Town Planning Ordinance amendment: Mr Moir told members that minor amendments were proposed to expedite the plan making process. The main proposal was that the Town Planning Board be empowered to set up sub-committees to deal with objections to town plans. Other matters of the Town Planning White Bill such as planning certificate were not covered by this amendment.

3.1 The White Paper on the Long Term Housing Strategy in Hong Kong was tabled. At the invitation of the Chairman, Mr Miller highlighted major changes in the development of public housing in Hong Kong. He explained to members the various types of schemes with public sector involvement eg public rental units, home ownership scheme, private sector participation scheme, home purchase scheme, sandwich class purchase scheme, etc.

3.2 Mr Miller said that cost of maintenance of public rental units was high and only less than 0.1% of the tenants would move unless during re-development.

3.3 Commenting on the recent tenant purchase scheme, he said that 82% of the units put up for sale in phase 1 had been signed up already. It was anticipated that no less than 25,000 units would be sold every year. The government would be selling Y-blocks built between 1985-92 and some of the harmonious blocks. Mr Miller mentioned that the government would be open to selling more units should manpower resources permit. He was confident of the 70% target for home ownership.

3.4 The Chairman commented on the importance of ongoing maintenance for the flats sold. Mr Miller said tenants of public housing were aware of the obligation for maintenance. The government would help by setting up a sinking fund enough for 10 years of maintenance for housing blocks that would be sold.

3.5 Mr Miller remarked that the impact of the sale of rental flats on HOS and private sector residential flats would be small. He said that it would represent the lower one-third of the market which was slack.

3.6 Mr Tony Chan commented on the very low selling price of the public rental housing units. As tenants of public housing were potential buyers of private flats, there might be a delaying effect for private housing development in the corresponding sector.

3.7 Mr Miller told members that traditionally HOS owners could sell their flats after ten years time after paying for a land premium. The period was adjusted to 5 years for TPS and 2 years for HOS. Public housing units buyers would have information on the level of the premium when they signed the deal.

3.8 It was anticipated that TPS would be competing with HOS. As a result, more white form applications for HOS might need to be accepted.

3.9 It was felt that a natural follow-up to the TPS would be privatisation of the commercial development of the housing estates under the scheme. It was suggested that the government could work together with private property developers on upgrading the facilities.

3.10 As for the sandwich class, some members suggested that the government substitute this scheme by providing cash subsidies to help home owners.

3.11 Dr Chan commented that for some older estates, maintenance would be expensive and re-development might be a better alternative. If these estates were sold off, multi-ownership might render re-development difficult.

3.12 The Chairman concluded the discussion by thanking Mr Miller and re-asserting the CSI¡¦s support for the direction of privatising the public housing. Mr Miller then left the meeting at this point.

3.13 After some further discussion on the White Paper, it was agreed that the Committee should study the paper and focus on longer term issues. Members were encouraged to forward their comments and views to the Secretariat.

The Secretary General reported that more than 60 people had signed up for the forum and bookings continued to come in. He encouraged members to promote the event to their business contacts.

Mr Tony Chan raised the matter of the sale by tender of the hotel site on Ma On Shan, commenting that the price had been too low and that the sale should have been withdrawn and the site re-zoned for residential use. This view was shared by Mr Mills. The Chairman and other members felt that the result should be upheld as the tender procedure had been properly gone through, and that the hotel zoning had been based on the long-term need of the industry.

There being no other business, the meeting adjourned at 5:50pm.

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Secretary	Confirmed	Chairman
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Minutes of a meeting of the HKCSI Real Estate Services Committee held on 18 February 1997 at 4:00pm at the Chamber Boardroom.

Chairman:	Mr Nicholas Brooke	Brooke Hillier Parker
Present:	Mr Tony Chan	 	T N Chan Surveyors International Ltd 
		Mr Michael Choi		Land Power International Holdings Ltd
		Mr Lau Chun Kong	Jones Lang Wootton Ltd
		Mr Andrew Lee		The Hong Kong Institute of Architects
		Mr Phillip Nourse	Chesterton Petty Ltd
		Mr S F Wong		Gammon Construction Ltd
		Mr Ian Christie		Hong Kong General Chamber of Commerce
		Dr W K Chan		Secretary General
		Ms Charlotte Chow	Deputy Secretary

Absent:		Mr Lawrence Mak		Hong Kong Island Development Ltd
		Mr Michael Moir		Swire Property Ltd
		Mr Jason Sze		A J Mason Development Ltd
		
Apologies:	Ms Catherine Chong	Wilkinson & Grist
		Mr Michael Clarke	Colliers Jardine (Hong Kong) Ltd
		Mr Mak Nak Keung	Sun Hung Kai Properties Ltd
		Ms Joyce Ting		Warson Overseas Development Co (HK) Ltd		Mr S Y Wai			The Real Estate Developers Assn of HK
		Mr M Y Wan		Henderson Land Development Co Ltd
		Mr Yuen Tak Tim		Airport Authority

1. Confirmation of Minutes

   Minutes of the meeting held on 3 October 1996 were confirmed and signed.

2. Matters arising

   The Secretary told members that following consultation with the Committee the CSI had submitted a letter to the Law Reform Commission in support of its recommendation in the Consultation Paper on the Sale of Description of Overseas Uncompleted Residential Properties. Mr Andrew Lee added that the Law Reform Commission Subcommittee on the issue would be meeting shortly to discuss follow up action.

3. Competition Policy

   Mr Christie reported that the Chamber working group on Competition Policy was finalising its position paper for submission to government. He explained that after drawing on experience of international bodies such as the World Trade Organisation, International Chamber of Commerce and the Pacific Economic Cooperation Council, it was felt that the economic condition of Hong Kong did not yet warrant a system of competition policy and authority as suggested by the Consumer Council. The proposal for a blanket policy for various sector was not practicable and Hong Kong should maintain its present practice of establishing policies as need arose. The Chairman added that the Consumer Council recommendations if implemented would also have serious implications on the working of the real estate services sector.

4. Estate Agents Bill

   4.1

   Messrs C K Lau and Michael Choi told the meeting that it was likely the Bill being passed by LegCo by May 1997. They expected that the requirement in respect of criminalisation would be watered down.

   4.2

   Mr Tony Chan observed that the main area of contention previously had been on information disclosure which was now by and large resolved. Disagreement however persisted over the extent of industry representation in the regulatory authority.

   4.3

   Members agreed that the Committee should monitor the development closely, in particular, if there were any proposal to reduce the one-third representation of estate agents.

   4.4

   The Chairman drew attention to a practice statement issued by the Institution of Chartered Surveyors on residential estate agency, which he asked the secretariat to circulate to members for information.

5. The Residential Property Market

   5.1

   Members felt that substantial profits in property transactions were isolated cases which were exaggerated by the media, and a general concern was expressed over misleading statistical presentation and analysis. Information on transactions quoted in the media were obtained from the Land Registry which reflected activities at least several weeks before. Isolated cases such as a steep inflation in the value of a small number of transactions (13 cases ) of Home Ownership Scheme flats, which was more a result of market ignorance, were sometimes reported as being the norm.

   5.2

   Commenting on recent development in residential market, Mr Choi felt that the government practice guideline has been effective. The 60% lending limit imposed by the Hong Kong Monetary Authority on luxury property also had the desired effect of cooling down the market.

   5.3

   Members expressed concern over the speculation of a 10% tax on short-term (two years) resale transactions and agreed that if such a tax was proposed, the committee should speak against it.

   5.4

   Mr Christie told members that in follow up to the Chamber position paper on the property market submitted to government last December, the Chamber had undertaken to produce a second paper on the bureaucratic hurdles to property development. As this issue was complicated and technical and requiring substantial research, he suggested that the Chamber, through this Committee, seek assistance from the Real Estate Developers Association for more specific input.

   5.5

   Mr Lau advised that the LegCo Housing Panel was also reviewing the same question and a paper was expected to be produced soon by the LegCo secretariat. The Secretary General undertook to contact LegCo on progress of its study.

   5.6

   Referring to the consultative document on the long term housing strategy review entitled Homes For Hong Kong People: The Way Forward, the Chairman suggested and it was agreed that the Secretary and Deputy Secretary for Housing be invited to a roundtable luncheon to brief the Committee as well as other Chamber/CSI Committees on government's proposals.

6. Urban renewal

   The Secretary General reported that the government had not responded to the HKCSI position paper yet. The Chairman understood that the LDC was pushing ahead with its experimental profit sharing scheme and he suggested that when the scheme was released, the HKCSI should invite representatives from the LDC for a briefing.

7. Territorial Development Strategy Review

   Mr Christie reported that the Chamber had submitted its recommendations to government. The Chairman added that the government was considering the issue of land use zoning in relation to industrial land, with two consultancy studies now being finalised. The Secretary General would liaise with Planning Department with a view to setting up a briefing meeting on the result of the consultancy study, to which the Chamber's Industrial Affairs Committee would also be invited.

8. Town Planning White Bill

   The Secretary General told members the white bill was a consultative document and was not expected to be presented to LegCo as a Bill yet. He anticipated that it would not be before 1998 when a draft Bill was put forward to LegCo.

There being no other business, the meeting adjourned at 5:15pm.

Secretary	Confirmed	Chairman
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