ST : Failed HK flat sale: Police raid developer's HQ

Jul 15, 2010

Failed HK flat sale: Police raid developer's HQ

Officers seize papers linked to deal on 20 luxury units, including 'world's priciest flat'

HONG KONG: Hong Kong police yesterday raided the headquarters of a major property developer embroiled in a controversy over the collapsed sale of what was billed as the world's priciest flat.

Officers from the financial hub's Commercial Crime Bureau swooped on Henderson Land Development's office in Hong Kong's financial district and took documents believed to be connected to the failed sale.

'As a result of the execution of the search warrants, we have seized a quantity of documents, which will be investigated and looked into further,' said Police Commissioner Tang King Shing.

'Today, we also invited a number of people back to the commercial crime bureau to assist in our investigations. At this moment, the police have arrested no persons concerning this case,' he added.

Henderson Land said it was cooperating with the authorities.

'Our company has provided relevant documents and appointed staff to help in the investigation,' the developer said in an e-mail statement in Chinese.

Inspectors also searched a law firm allegedly connected to the failed sale of luxury flats at the exclusive 39 Conduit Road towers in the city's Mid-Levels residential area, local radio RTHK reported.

'At this stage, it's really hard to tell what's going to come out from the investigation,' said Professor Eddie Hui of the building and real estate department of Hong Kong Polytechnic University.

'Even if the police took some documents from their office, it still does not mean they have committed any wrongdoing. We have to be careful in drawing any premature conclusions.'

Analysts said they expected the Hong Kong developer's shares, which have lagged behind its peers, to come under pressure in the days ahead.

Last month, the Hong Kong government said it was looking into the cancelled sale of 20 multimillion-dollar flats developed by Henderson in Hong Kong, while legislators have been questioning the developer's practices over the past few weeks.

The cancellations included a duplex unit that had fetched a global record price of HK$71,280 (S$12,695) per square foot last October. In the end, only four units were sold in that development, Henderson Land said.

Critics have demanded a probe, asking why the cancellations came to light only eight months after the announcement of the sales, which helped hike prices of the city's luxury residential flats and stoked concerns about a property bubble in the former British colony.

Questions have also been raised about the relatively small deposit that Henderson kept after the failed sales, and why all the buyers appeared to have used the same law firm to process the transactions.

Henderson Land responded with advertisements in major newspapers saying the purchases were genuine and that the company was not connected with the buyers. It has said it will cooperate with the probe.

REUTERS, AGENCE FRANCE-PRESSE, BLOOMBERG