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New World carried on selling flats at The Pavilia Farm III after concrete defects were found, as engineers didn’t deem them serious

The developer enjoyed two lively sales weekends after the defects were found in two blocks later earmarked for demolition

Some buyers struck a forgiving tone, saying New World had acted properly and would learn from the experience

New World Development kept selling flats at The Pavilia Farm III – including two tower blocks earmarked this week for demolition – on June 20 and 27, days after defects were found, because engineers did not consider them serious enough to warrant drastic action.

The sale on June 20 was a success, with the developer selling 169 of the 173 flats on offer for a total haul of about HK$2.7 billion (US$347.57 million) in one day. The biggest customer forked out HK$54 million for three flats, while a unit at Tower 1A sold at HK$29,037 per square foot, a price record for Phase III.

A week later New World ratcheted up another bumper weekend, selling 79 of 85 flats at The Pavilia Farm III, in Tai Wai, even after a 24 per cent price increase from a month earlier.

“As the test result was preliminary, maybe the [developer] wanted to double confirm” before taking drastic action, said CGS-CIMB Securities’ managing director Raymond Cheng, adding that the sales outcome would not have been affected by much even if the test results had been known. “Of course it’s not ideal and very good, but it’s not intentional.”

Days later, on July 3, New World’s contractor reported that the concrete strength in sections of the wall base in two of the seven tower blocks in the project’s latest phase failed to meet design standards. It was another five days before the developer took the unprecedented step of announcing its plan to tear down and rebuild the affected towers, and compensate customers for delaying their delivery by nine months.

The two weeks that New World took to announce its course of action was acceptable to James Mak, who paid HK$23.4 million for a four-bedroom unit at The Pavilia Farm III measuring 998 square feet.

“It’s such a big event,” Mak said. “They must have held a lot of meetings within the last two weeks to make such a decision. It’s not an easy decision to make at all. I believe they will be twice as careful in future.”

“A subsequent assessment by a registered structural engineer confirmed the structural safety of the building,” according to the developer’s statement on July 9. “It was also found that the wall structure in question only made up approximately 1 per cent of the total wall structure of the building.”

The developer appointed senior engineer Wong Chi-ming as an independent, third-party expert to lead a professional team to supervise the demolition and rebuilding work.

“Such issues are not uncommon and can be resolved through partial replacement or reconstruction with no impact on key dates with building completion and flat handover,” New World said.

The demolition shocked buyers, 846 of whom have snapped up units at The Pavilia Farm.

One, who was only willing to be identified by his surname, Lui, said he admired the way New World took accountability for the incident, instead of covering it up. The buyer, who paid HK$9.83 million for a 473-square foot unit at the project, said he remained confident in Hong Kong’s developers.

“This incident is an opportunity for the company, if they want to further upgrade their management level … even though in the short term there will definitely be reputational damage,” said Cheng, adding that the developer had quickly done basically everything they could do in short term to protect consumer benefit.

(South China Morning Post)