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Hong Kong economy
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Letters | Sale of Hong Kong homes by tender needs urgent regulation

  • Readers discuss the lack of transparency of a sales tactic favoured by developers, an opportunity for Hong Kong to strengthen its bonds with the Arab world, and encouraging young people to pursue their dreams

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Prospective buyers stand in line outside the sales office for a housing project on April 6. The withdrawal of property cooling measures in Hong Kong has given the market a boost. Photo: Bloomberg
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The withdrawal of property cooling measures in Hong Kong has boosted the market, with property transactions last month reaching a three-year high. But despite the renewed market vigour, the controversial practice of developers selling new flats via tender has continued.

The lack of transparency in this albeit legal sales tactic demands attention if stakeholders’ interests are to be protected and the stability of the financial system ensured.

Typically, developers of mass-market homes will first try to sell them by offering several price lists in batches. But if the market response is tepid, the developers may opt to sell their properties by tender. Such a method, in which buyers submit their bids without knowing what the prevailing price is, has been heavily criticised as being opaque and unfair to the buyer and tending to inflate prices.

In 2019, the Real Estate Developers Association (REDA) of Hong Kong released guidelines stipulating that flats below a certain size should not be sold by tender. But these guidelines are not legally binding. This reflects the weakness of the current regulatory mechanism.

Insufficient transparency and the lack of comprehensive disclosure requirements and deterrence measures make it challenging to effectively address any malpractice. The lack of transparency not only distorts market perceptions but also harms potential buyers’ interests.

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