Reflection on Alex Cheng’s “Ethical Sales Tactics in the Housing Market”

(Info Planet： Night Views of Global Cities)

In Hong Kong, the value of apartments has been calculated in “gross floor area” for many years. Major setback of this metric for customers includes the functionality of this metric. Many property developers in Hong Kong including the popular Cheung Kong Limited (SEHK: 0001) and SHK Development (SEHK: 00016) have been publicized about their exploitation of “gross floor area” to earn more profit by boosting the metric with non-functional areas like some long narrow corridors at the side of a room which has little to no apparent use for the consumers. Therefore, the government implemented a new measurement for housing by indicating the saleable area, which aims to provide better transparency for buyers to protect them from unethical developers.

I agree with Alex’s ideas about the Saleable Area policy. This policy not only adds advantage to the consumers by helping them to obtain symmetric information about the housing market, but it also reduces incentives for developers to manipulate the metric; due to Hong Kong’s leading position in the global housing market, the successfulness of this implementation will have significant implications on other similarly expensive housing markets such as London, Shanghai, Singapore and Vancouver by guiding them on future government policies and responses to such concerns.

Beside the short term purpose of providing more functional areas for consumers through creating better transparency, the Saleable Area Policy also serves a long term purpose to have unethical marketing strategy on real-estates ceased to work through improvements on government policies, market education and corporate social responsibilities, which would help people to gain more confidence about the housing market to strengthen or stabilize the economy, and also allow more people to be able to afford a home in the major cities by freeing more usable spaces.