Asymmetric information in the Hong Kong forward property market.

Next Magazine (2005) Buyers wait and see--A fight between Consumer Council and Cheung Kong, Next Magazine, 29 September 2005.

Ong, S. E. (1997) Building defects, warranties and project financing from pre-completion marketing. Journal of Property Finance, 8(1), p. 35-51.

Ong, S. E. (1999) Caveat emptor: adverse selection in buying properties under construction. Property Management, 17(1), p. 49-64.

Property Times (2006) Rehda explains why developers are saying 'no', Property Times, 26 April 2006, http://www.nst.com.my/Weekly/ PropertyTimes/News.

Sim, A. (2006) High-end developers hone their marketing methods, The Business Times, Singapore, 19 August 2006.

SCC (2006) The Regulation of New House Building in Scotland, Scottish Consumer Council.

Tang, B. S. and Liu, S. C. (2001) Curses of Arrogance: The risks of exporting Hong Kong property development strategies to Mainland China, Research Monograph, The Hong Kong University of Hong Kong.

The Star (2004) Build & sell concept the only solution? The Star, 14 August 2004, Malaysia.

Tribune (2005) Special to the Tribune, Tribune, 18 September 2005.

Yang, Z. (2001) An application of the hedonic price model with uncertain attribute: The case of the People's Republic of China. Property Management, 19(1), p. 50-63.

(1) A presale is different from a custom sale of an uncompleted property. In a custom sale, the buyer owns the land and hires the builder to build the property. In a presale, the builder owns the land, obtains the construction finance, builds the house and then conveys the completed property to the buyer (Tribune, 2005).

(2) Following is a progress payment schedule of a 30-floor condo presold in Dubai (Homesgofast, 2006):

- Deposit (within 7 days of purchase) : 10%

- 1St instalment (within 30 days) : 10%

- 2nd instalment (within 90 days) : 10%

- 3rd instalment (Podium ready) : 10%

- 4th instalment (10th Floor ready) : 10%

- 5th instalment (20th floor ready) : 15%

- 6th instalment (structure ready) : 15%

- 7th instalment (handover) :20%

(3) The builder/developer is required to obtain an insurance policy, or a 'termination' guarantee, to protect the construction works in the event that he goes bust before completing the property (Justlanded, 2006).

(4) The Consent Scheme can be applied only to developments under government lease of which the government has been given the control over the development. For those redeveloped land of which no such consent is required in the lease, the Law Society has issued a statutory declaration form and a standard form of Agreement for Sale and Purchase with the mandatory clauses similar to those that are used for the Consent Scheme for use of redevelopment projects, know as Non-consent Scheme.

(5) For example, a flat which was claimed to have a gross area of 1078[ft.sup.2] with saleable area of 857[ft.sup.2], the usable floor area inside the flat was found 640[ft.sup.2], only about 60% of the "gross" area (Next Magazine, 2006).

SANTRAUKA

ASIMETRINE INFORMACIJA HONKONGO ISANKSTINEJE (DAR NEPASTATYTO) TURTO RINKOJE

Barbara Y. P. LEUNG (1), Eddie C. M. HUI (2) and Bill SEABROOKE (3)

(1) Department of Building and Real Estate, The Hong Kong Polytechnic University, Hong Kong, China E-mail: "Yuk Ping Barbara Leung [BRE]" bsbleung@inet.polyu.edu.hk

(2) Department of Building and Real Estate, The Hong Kong Polytechnic University, Hong Kong, China E-mail: "Eddie Hui [BRE]"

(3) Department of Land Economy, Cambridge University, UK

Barbara Y E LEUNG, Eddie C. M. HUI, Bill SEABROOKE

Isankstines sutartys, pardavinejant plota neuzbaigtuose pastatuose, populiareja daugelyje saliu. Taciau nera daug tyrimu, kuriais siekiama isnagrineti rizika, kylancia del asimetrines informacijos, budingos turta perkant isankstinio pardavimo metu, ir kritinius veiksnius, kurie padetu efektyviai pletoti dar nepastatyto turto rinka. Honkongas--viena is didziausiu dar nepastatyto turto rinku pasaulyje. Ji pradejo bresti po puse amziaus trukusios raidos. Todel siame darbe siekiama isnagrineti asimetrines informacijos problema, aptinkama dar nepastatyto turto rinkose ivairiose srityse. Straipsnyje, pateikiant pavyzdziu is Honkongo dar nepastatyto turto rinkos pletros, tyrinejama grupe veiksniu, kuriu vaidmuo yra lemiamas tokios rinkos pletroje.

Received 10 January 2007; accepted 2 April 2007 Table 1. Presale payment methods and problems in different forward property markets Forward property markets Hong Kong, Taiwan China

Singapore Payment methods

100% in advance [check] [check] [check]

Progress payment [check] [check] [check]

10(5)/90(95) [check] [check] n/a

Retention money X n/a X Presale property problems

Development default X [check] [check]

Delay of completion [check] [check] [check]

Building defects [check] [check] [check]

Features mismatch [check] [check] [check]

Exaggeration of saleable [check] [check] [check]

areas

Unscrupulous marketing [check] [check] [check]

tactics Forward property markets Malaysia Canada, US,

UK, Australia Payment methods

100% in advance n/a n/a

Progress payment [check] [check]

10(5)/90(95) [check] [check]

Retention money [check] X Presale property problems

Development default [check] [check]

Delay of completion [check] [check]

Building defects [check] [check]

Features mismatch [check] [check]

Exaggeration of saleable [check] [check]

areas

Unscrupulous marketing [check] n/a

tactics Forward property markets Morocco, Greece

Dubai Payment methods

100% in advance n/a n/a

Progress payment [check] [check]

10(5)/90(95) [check] [check]

Retention money n/a [check] Presale property problems

Development default n/a n/a

Delay of completion n/a [check]

Building defects n/a n/a

Features mismatch n/a n/a

Exaggeration of saleable n/a n/a

areas

Unscrupulous marketing n/a n/a

tactics Note: "[check] = yes, X = no, n/a = information not available Table 2. Number of forward ASPs to total number of ASPs in the first-hand market Year Total no. ASP on uncompleted % of uncompleted

of ASP properties properties sales

to total ASP 1993 23375 18191 78% 1994 10778 6525 60% 1995 4704 3440 73% 1996 9109 4975 55% 1997 15500 12082 78% 1998 23384 17534 75% 1999 22121 11093 50% 2000 18151 5849 32% 2001 18539 8493 46% 2002 16541 9926 60% 2003 19047 7529 40% 2004 18566 4691 25% 2005 13495 8772 65% Source: Data are extracted from the Economic and Property Research Centre (EPRC)