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SCMP Reporter

Homebuyers believed to be short-changed due to lack of agreement on what makes up  marketable gross floor area

Developers have been accused of gaining an extra gross floor area (GFA)  of as much as 50 per cent  by including common areas in residential sales.

It is an industry practice for developers to quote sales prices on a gross floor area basis.

But as there are no regulations governing the definition of gross floor area in sales brochures, developers are practically free to include in the quoted floor area portions of common areas such as clubhouses and pump rooms.

Tony Wan Wai-ming, director of professional services at Knight Frank Petty, said developers  include more common areas in residential projects, as there  is no agreement on the definition of marketing gross area in the industry.

The marketing gross area is the sum of the gross area of all units in a project shown in sales brochures.

The  New World Development brochure says its luxury villa, 33 Island Road, has 10 houses with a marketing total floor area of 63,809 square feet, 48 per cent more than the gross floor area approved by Buildings Department.

The developer's  mass residential project, the Grandiose, in Tseung Kwan O, was 19 per cent more than the gross floor area of 914,794 sq ft approved by the department.

'Luxury projects have lower development density with a higher proportion of car parking space than mass residential projects. That's why the difference between the marketing gross area and plot ratio gross floor area could be more than 40 per cent,' said  Mr Wan.

Under the Building (Planning) Regulations, the gross floor area includes some common areas such as corridors and main entrances.

Other areas such as car parking spaces, electrical switch rooms, meter rooms, water tanks, transformer rooms, generator rooms, pump rooms, telephone equipment rooms and the floor area of clubhouses that do not exceed  5 per cent of the domestic gross floor area are excluded from the definition of a gross floor area.

But those common areas are included in residential sales. A case in point is a 952 sq ft  unit at Sun Hung Kai Properties'  Noble Hill in Fanling that needs to share a common area of 190 sq ft.

Deducting the size of the common area, the  flat's saleable area was only 762 sq ft. The difference of 190 sq ft, based on about HK$4,412 per square foot transaction prices in January  last year, means the buyer has to pay HK$838,000 for the common area.

Developers definitely benefit from including common areas such as plant rooms in residential sales, surveyors said. They said the construction cost of common areas is usually lower than saleable areas.

But developers sell common areas and saleable areas  at the same prices,   increasing their sales revenue.  The reason is that  developers are willing to pay aggressive prices to  acquire development sites.

Some developers claim they have adopted gross floor area in their marketing campaigns. But  the GFA they use deviates from the definition of GFA under the Building (Planning) Regulations, as the regulations  do not govern floor areas used in sale brochures.

Raymond Chan Yuk-ming, senior vice-president of the Hong Kong Institute of Surveyors, said: 'Many people have no idea developers have included  common areas in their residential sales.'

Mr Wan said: 'Property prices would look expensive if developers sold properties in terms of saleable area. It will hit the property market and have drastic changes in property prices if developers are forced to quote sales prices on a saleable floor area basis.'

A surveyor said it is time to use the new method as the introduction of green features such as utility platforms and balconies have been included in saleable area. It made the floor area look bigger, but the efficiency rate became lower.

'We have been suggesting  they use this method in calculating unit prices for 20 years. But the concept remains unchanged,' he said.



Builders gain from GFA definition