The debt crisis of China Evergrande (3333) continued. The group planned to build nearly 250,000 square feet of palace houses and land in Yuen Long and Sang Wai with a total area of over 2.42 million square feet. In January this year, it was taken over by American asset management company Oaktree Capital.
"Hong Kong 01" found that the Evergrande subsidiary "Yingbang Enterprise" that held the land was filed for service fees last year.
The document revealed that Evergrande had commissioned a surveyor firm to negotiate with the Lands Department on the amount of land premium for the Heshengwei site, and after an appeal, it successfully reduced the original land premium of over 6.84 billion yuan to about 4.15 billion yuan , the split price is nearly 2.7 billion yuan.
The Lands Department pointed out that the developer appealed the amount of land premium more than once during the process, but refused to disclose the details.
Some scholars questioned that the reduction in land premium was not proportional to the change in property prices at that time, and believed that the Lands Department should explain.
Evergrande once planned to build a 250,000-square-foot palace house in Heshengwei, which was taken over by creditors and put up for sale. The response was lukewarm
The land-holding company was sued by the surveyor's firm for 6 million yuan in service fees
The land in Heshengwei involved covers an area of more than 2.42 million square feet and is held by Yingbang Enterprise Co., Ltd.
In July 2020, China Evergrande completed the acquisition of Yingbang Enterprise from Henderson Land Development. It plans to develop low-density residential towers on the site and build a palace house of nearly 250,000 square feet, which has attracted attention from all walks of life.
With the outbreak of Evergrande's debt crisis, the land has been taken over by creditors.
In October last year, Yingbang was sued by Fuan Surveyors, accusing it of failing to pay additional service fees in accordance with the agreement and recovering 6 million yuan.
According to the petition, Yingbang Enterprise entrusted the surveyor firm in July 2020 to apply to the Lands Department for land exchange and contract revision with the Shengwei site.
At that time, the Lands Department estimated that the land premium in Heshengwei was about 6.84 billion yuan. Yingbang Enterprises hoped that Fuan Surveyor could lobby the Lands Department to reduce the amount of land premium.
The agreement signed by the two companies states that if the surveyor's firm can reduce the amount of land premium to 5 billion yuan or less, Yingbang will pay an additional 6 million yuan in service fees.
The amount of the land price in the petition has been greatly reduced by 40%
The surveyor firm pointed out in the filing that at the end of September 2020, two months after being entrusted by Yingbang Enterprise, the Lands Department had lowered the amount of land premium to be paid for the land in Wo Sang Wai to about 4.15 billion yuan.
In other words, in an appeal, the Lands Department has significantly reduced the amount of land premium for the land involved by nearly 40%, with a split price of nearly 2.7 billion yuan.
In January 2021, Yingbang Enterprise signed an agreement with the Lands Department to supplement the land price documents and completed the land exchange transaction.
The Heshengwei land involved is currently locked, and there is no sign of construction and development.
(Photo by Zhou Zhijian)
Lands Department: The developer appealed more than once for not disclosing the reason for the price reduction
The Lands Department replied that it was not the first time in 2020 that the Lands Department had approved the premium amount for the application for the land involved and Shengwei, and the developer had appealed the amount more than once during the process.
However, the Lands Department stated that the details of individual cases were private discussions between the applicant and the government as the owner, which also involved the commercial information of a third party. It would not disclose the detailed negotiation content and process of each land exchange and land lease amendment. Reply to questions such as the number of appeals of Yingbang, the appeal time, and the reason why the agency finally decided to reduce the price by nearly 2.7 billion yuan.
The Lands Department pointed out that when processing land premium approval, it is based on the assessment of the full market value of the land at that time. In the assessment, it will also take into account the reasons for appeal put forward by the applicant and the factors related to the market at that time, so as to reflect the market situation at that time.
The Department will also consider various construction and infrastructure requirements of the development under the new lease conditions.
The current profit ratio used to assess the land price of residential land is 20%.
"Hong Kong 01" once made inquiries to China Evergrande regarding the appeal of the land premium in Shengwei, but has not received a reply before the deadline.
The reporter had learned about the incident with Fu An Surveying Firm, but the staff pointed out that the person in charge refused to be interviewed on the grounds that the client's information could not be disclosed, and the surveying firm did not reply to the written inquiry.
Chen Chaoguo, a senior member of the Property Surveying Group of the Hong Kong Institute of Surveyors, believes that the appeal of the land premium in Heshengwei has a chance to start before Evergrande takes over.
(File photo/Photo by Cai Weinan)
Surveyor: The general appeal period is four to six months or it has started before the acquisition by Evergrande
According to the Lands Department's information, the assessment of the first land premium for lease modification or land exchange transactions is generally handled by the Department's "Appraisal Committee".
If the applicant is not satisfied with the amount of land premium, he may file an appeal within one month after receiving the binding agreement on the amount of land premium, and provide relevant market information and reasons for support within the next three months. Submit it to the "Appraisal Conference" for processing.
Chen Chaoguo, a senior member of the Industrial Survey Group of the Hong Kong Institute of Surveyors, believes that it is difficult to draw a conclusion on whether Evergrande’s 2.7 billion reduction in land premium is too much in one appeal, and it depends on the circumstances of the case and the reasons put forward by the developer.
He pointed out that the Lands Department usually makes its own valuation at the beginning, and the first bid price is usually aggressive and may not be a reference. When appealing, the developer can provide data for the Lands Department's reference and re-estimate: "Considering these factors , it is not impossible to reduce the amount of land premium by 30 to 40%.”
Chen Chaoguo pointed out that the general land premium appeal process takes four to six months, and it is rare for the Lands Department to grant a new amount within two months. Therefore, he believes that the appeal of the land premium in Woshengwei has a chance before Evergrande takes over. Expanded.
Zhuang Tailiang, a professor at the Department of Economics at the Chinese University of Hong Kong, believes that when Evergrande appealed, the property price did not change much, but the Lands Department lowered the land premium by 40%, and the reason should be explained.
(File photo / Photo by Lu Yiming)
CUHK Professor Zhuang Tailiang: The price reduction is too large and involves public funds and citizens should have the right to know
However, Zhuang Tailiang, a professor at the Department of Economics at the Chinese University of Hong Kong, questioned that when Evergrande appealed, the property price did not change much, but the Lands Department lowered the land premium by 40%.
He pointed out that if the market price falls, the government may not be able to adjust it immediately, and there will be a lag.
He believed that the government would generally rely on the treasury, but pointed out that if the decrease in the land premium would affect the public’s perception, the Lands Department should explain more: “Public money is always involved, and the public has the right to know why the land premium is so low. Questions about private grants or abuse of power.”
China Evergrande's debt crisis continues. The picture shows the China Evergrande Center in Wanchai.
(File photo/Photo by Luo Junhao)
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