China Real Estate Development Group (CRED) says it will make a bid to purchase Hong Kong's vacant public-owned housing and sell it to mainlanders as time-share apartments.
"We are waiting for the bidding process of the
Hong Kong Special Administrative Region (SAR) Government to begin to buy the vacant housing," Meng Xiaosu, chairman of CRED, told China Daily during an exclusive interview.
The deal is expected to be concluded within the year.
CRED isn't expected to face any other bidders and the central and SAR government have been forthcoming in removing any remaining obstacles to the completion of the deal, namely travel restrictions for those wishing to travel to Hong Kong, Meng said.
CRED, the largest state-owned real estate conglomerate in China, is financially prepared to buy the public housing, Meng said.
An earlier report from the China Business Times indicated that CRED would buy the public housing at about 20,000 yuan (US$2,415.46) per square metre and then sell the units to urban residents from 20 mainland cities.
Meng refused to confirm the price, saying the final transaction price for the
Hong Kong public housing bid has not yet been determined.
He said the price of time-share apartments would be set at a range affordable for middle-income earners from the Chinese mainland and, he added, mainland and
Hong Kong banks have been facilitating the loan process for home buyers.
Land use rights for the public housing units will last 43 years.
However, buyers of each time-share apartment will receive a one-week
Hong Kong residency permit each year.
Hong Kong media reported in September that CRED offered to buy vacant public housing owned by the
Hong Kong Housing Authority for HK$20 billion (US$2.5 billion).
"Our negotiations had lasted for more than one year before that," Meng said.
"Originally we were not going to buy public housing, but the responsibility to help Hong Kong, which was troubled by declining property prices, encouraged us to consider it," Meng told China Business Weekly.
Since 1997, the
Hong Kong SAR government has been aiming to provide 70 percent of
Hong Kong residents with affordable public housing.
Real estate developers and
Hong Kong homeowners have complained that the government's move has lowered property prices.
Facing strong opposition, the plan was abandoned in late 2002. But the completed 25,200 vacant public housing units became a heavy financial burden for the SAR government.
"The mainland's huge consumption potential, Hong Kong's attraction to mainland travellers, and most importantly, CRED's credit and national sales network will make the deal highly beneficial and profitable," Meng said.
Mainlanders will benefit from affordable residential facilities, the
Hong Kong SAR Government will benefit from a reduced financial burden and
Hong Kong residents will benefit from the alleviating pressure of public housing on the property market, explained Meng. With an increase in the number of mainland visitors to the region, CRED will likely benefit from the deal.
Property prices stopped dropping last September with word of the possible deal, Meng said.
He added that money is not a problem for his group because CRED has huge capital reserves and the deal could include future purchases.
Established in 1981, CRED has more than 340 affiliated enterprises and about 60 billion yuan (US$7.2 billion) in capital.
The chairman also eased the worry that the proposed time-share apartments will impact
Hong Kong hotels.
"We have different sources of customers," Meng said.
Currently, Hong Kong's Individual Travellers' Scheme is only open to travellers from Beijing,
Shanghai and Guangdong Province, while travellers from other mainland cities can visit
Hong Kong only through package tours and stay in hotels arranged by travel agencies.
But CRED's time-share apartments will be sold mainly to residents from outside these three regions.
"It is unlikely that the Individual Travellers' Scheme will be expanded to other cities and provinces due to the potential for illegal immigration. Therefore, our time-share apartments will only bring more travellers and, hence, greater consumption for
Hong Kong businesses rather than snatching market share from
Hong Kong hotels," Meng told China Daily.
