39 Conduit Road

Completed in March 2009, 39 Conduit Road is a high-end residential property in Hong Kong developed by Henderson Land Development.

The building, designed by architect Arthur Au, is a single tower with 45 storeys above ground, of which 39 are residential floors. The tower includes, among other things, 66 residential units, ranging in size from 260 m2 to about 710 m2. Among the amenities, we find a 1-storey club house, as well as a 6-story podium car park with over one hundred car parking spaces.

The 45-story building where the top floor is the 88th floor

The building received worldwide attention when, in the fall of 2009, Henderson announced that a five-bedroom duplex flat on the 68th floor of the building had sold for a record-breaking HK$439 million. The high price tag – equating 9,200 USD per square foot – was soon overshadowed by the fact that a building with 45 stories above ground could have apartments on the 68th floor.

Henderson fought back against accusations of deceptive marketing, arguing that omitting a total of 42 floor numbers was not deceitful.

In Chinese culture, the number 88 is associated with good luck, and Henderson therefore named the top floor 88 instead of 45. In Hong Kong, the Buildings Department only require the numbering of floors to be made in a logical order; skipping floors is not prohibited, and it is actually quite common for buildings in Hong Kong to not have any floor named 4th floor (since 4 has negative connotations).

The list of floors ”missing” from the 39 Conduit Road building includes 14, 24, 34, and 64. All floors between 40 and 59 are also missing, and the numbering skips directly from floor 68 to floor 88.

Short facts about the 39 Conduit Road building

Name in Chinese: 天匯 (traditional), 天汇 (simplified)

Location: 39 Conduit Road, Hong Kong

Coordinates: 22.2816°N 114.1469°E

Construction period: 2006 – 2009

Owner and developer: Henderson Land Development

Architect: Arthur Au

Architecture firm: Dennis Lau & Ng Chun Man Architects & Engineers (HK) Ltd

Structural engineer: Stephen Cheng Consulting Engineers

Civil engineer: Ove Arup & Partners Hong Kong Ltd

Main contractor: Heng Shung Constrn. Co. Ltd. (subsidiary of developer)

Height: 190. 9 metres

Floor count: 45 above ground, 1 below ground

Floor area: 21,298.5 square metres

Background

In 1965, the building Rocky Mount was completed on the site where we now find the 2009 building 39 Conduit Road. Rocky Mount was an 11-storey construction containing 44 units used by civil servants.

In the 1990s, Hederson chairman Lee Shau-kee started acquiring units in Rocky Mount. After the turn of the century, he increased his efforts and began paying significantly more per unit. When he owned 41 of the 44 units, he applied to the Lands Tribunal for compulsory purchase of the three remaining units, but in the end, no compulsory purchases were necessary due to an operation with Peixin Group which resulted in the remaining units being sold for an average cost of 12 million HKD.

Lee Shau-kee then sold his 60 percent equity of the site to the Henderson company for 1.75 billion HKD.

Fake purchases controversy

After the storey-numbering controversy, 39 Conduit Road faced another round in the limelight when it turned out that only one appartment sale had been fully completed within the conventional three-month completion period, and that all but four transactions – including the highly publicised record-breaking 68th floor deal – were still uncompleted.

The company was also facing criticism for calculating floor area in a way that converged from the norm, making it more difficult for potential buyers to compare offers, and for the general public to understand how these very high per-square-foot prices were achieved.

Off-shore shell companies

It was eventually revealed that the record-breaking (and never completed) 68th floor appartment purchase in 2009 had been made by a company registered in the British Virgin Islands (BVI), and further digging by the South China Morning Post unearthed that all 24 units that Henderson had sold on the first day had been purchased by shell companies registered in BVI. Also, all those companies had been registered by the same law firm.

By the end of March 2010, Land Registry records showed that only one of the 24 flats had gone through a complete purchase transaction. Henderson responded by saying that the company had entered into a verbal agreement with the 24 buyers to extend the transaction date for two to four months, subject to further extension.

After a request from the Lands Department, Henderson sent in a four-page response explaining that the company had allowed the buyers to extend the transaction deadline after the Hong Kong Monetary Authority issued a notice on 23 October to banks to reduce lending to finance purchase of luxury homes.

On 15 June, Henderson announced that the purchases of all but four of the 24 properties sold in October had been cancelled. According to Henderson, failure to complete was very standard in the industry and the buyer´s deposits had been forfeited.

The four apartments that did complete were located on the 30th and 31st floor, and sold for between 37,800 HKD and 40,900 HKD per square foot.

In July 2010, the offices of Henderson and a legal firm acting for them were raided by the Commerical Crime Bureau, and documents concerning the 20 cancelled sales were confiscated. In February the following year, the police revealed that only four buyers were responsible for all 20 transactions.