HONG KONG – New World Development will demolish two towers at Hong Kong’s most popular housing development in decades and compensate buyers after finding unexpected defects, in a major setback for the real estate company.
The developer will pull down and rebuild the existing floors of Towers 1 and 8 at its Pavilia Farm III project above Tai Wai MTR station after it found the concrete strength in some areas did not meet design requirements, the Hong Kong-based company said in a statement.
The concrete of the walls in the podiums of both blocks was found with defects during concrete strength tests on Saturday, said the developer. It added that the concrete of the other five towers of the three-phase estate met the standard.
Shares of New World fell as much as 4.8 percent Thursday in Hong Kong, the most in more than seven months, before recovering to close 3.9 percent lower.
The real estate company led the new residential market recently with the project, which was so popular that 88 buyers vied for one apartment – making it the most in-demand development in the city since 1997
The demolition is a reversal of fortunes for New World, led by tycoon Adrian Cheng, just as property prices in the city are hovering near an all-time-high set in mid-2019.
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The real estate company led the new residential market recently with the project, which was so popular that 88 buyers vied for one apartment – making it the most in-demand development in the city since 1997.
The reconstruction will delay the date of occupancy by nine months. The 846 affected buyers could opt to cancel the deal or continue with it, with compensations promised for either choice, the company said in a statement.
The developer plans to compensate the buyers with as much as HK$1.15 million (US$148,030) for a home worth HK$15 million.
New World has also reported the matter to MTR Corp, joint developer of the project, and the government, the developer said.
In a separate statement, the Hong Kong government's Buildings Department said it is highly concerned about the blunder and has launched an investigation into the incident.
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The department said it sent teams to inspect the buildings on Wednesday and confirmed there is no obvious danger in the blocks’ overall structure. It has asked the developer to submit reports on additional testing of the other five blocks.
The department said they will investigate whether anyone has violated the Buildings Ordinance during the construction.
With Bloomberg inputs