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2021
8 Jul

Handover delay at The Pavilia Farm III above Tai Wai station Four major commitments to ensure buyers peace of mind NWD decides to demolish and rebuild to ensure quality

Contractor instructed to thoroughly investigate incident Site supervision team immediately replaced

The Pavilia Farm III is a joint development between New World Development (the Company) and Mass Transit Railway Corporation (MTRC) above Tai Wai station. On July 3, the Company received a report from the project contractor, Hip Seng Group of Companies, who found during an inspection carried out on the same day that the concrete strength in sections of the wall base beneath Tower 1 and Tower 8 did not meet the requirements of the approved design. On July 6, the Company proactively reported the matter to MTRC and the Buildings Department. It also decided to demolish and rebuild the structures concerned and explain the matter to the public. In addition, the Company has instructed the contractor to thoroughly investigate the cause of the incident, including if there was any human negligence and supervisory liability. Furthermore, it has immediately replaced the relevant project supervision team. The Company has always placed the utmost priority on safety and quality in its property development projects and it is handling this incident in an open and most transparent manner to ensure peace of mind for buyers.

New World Development stressed that only two buildings under construction in The Pavilia Farm III (Towers 1 and 8) were involved in the incident. The construction quality and structural safety of Pavilia Farm I and II meet all relevant legal and statutory requirements. The Company was informed by the project contractor in mid-June that the concrete test data from sections of the wall structure in Tower 8 of The Pavilia Farm III did not meet the requirements. Immediately following an assessment by a registered structural engineer that certified the structural safety of the building, the Company proactively initiated a comprehensive inspection. An inspection on July 3 then found that the concrete strength in sections of the wall base beneath Tower 1 and Tower 8 did not meet the necessary standards. On July 6, the Company proactively reported the matter to MTRC and the Buildings Department and confirmed to them the full test results.

To ensure the building quality of The Pavilia Farm III and to provide peace of mind to our customers, the Company has decided to demolish and rebuild the floors that have already been built in Towers 1 and 8. This course of remedial action will result in a delay of approximately nine months to the occupancy date (exact date to be confirmed by the authorised person). The Company would like to apologise to those affected by the handover delay. In the most responsible manner, we have proactively reported the matter and will make the following four commitments to 846 affected buyers*:

1.

Free choice to buyers: Buyers can choose to complete the agreement for sale and purchase or cancel the transaction immediately. Whichever option they choose, they will receive an extra subsidy and mortgage interest compensation.

2.

Interest compensation: Calculated from June 30, 2023 until the date of transaction, at the prime rate plus 2% (i.e. 7%). The maximum interest compensation will cover the full period of the handover delay.

3.

Extra subsidy: Based on a property price of HK$15 million, a buyer on a cash payment mortgage plan will receive an extra subsidy (plus interest compensation) totaling HK$1.15million.

4.

Quality assurance: We will ensure that the completed buildings in The Pavilia Farm III meet all relevant legal and statutory standards for construction quality and safety. We will also commission an independent third party to inspect the apartments and certify that they are safe before handing them over to buyers.

*For details, please refer to the attached table. Items #1 to #3 listed above are subject to the approval of the relevant government departments.

In the coming days, we will arrange for dedicated staff to follow up and send letters to The Pavilia Farm III flat buyers to fully explain the arrangements. Meanwhile, we have set up a hotline, +852 3563 7368 (service hours: Mon to Fri, 10am to 1pm; 2pm to 8pm) to answer buyers' enquiries. The hotline will commence service on July 9.

Earlier, the Company had completed structural inspection of Phases I and II, with the results showing that the five towers (Towers 2, 3, 5, 6 and 7) over the two phases meet all relevant legal and statutory standards for structural safety. The inspection reports have been submitted to the relevant government departments. Furthermore, the Company has recently commissioned an independent third party to conduct additional testing to provide peace of mind to flat buyers in The Pavilia Farm I and II; all test results have met the required standards.

The Company has instructed the contractor to thoroughly investigate the cause of the incident and take immediate remedial action. It will also undertake a full review of reporting mechanisms for contractors. Construction work at The Pavilia Farm III is now suspended. The Company reserves the right to pursue legal liability and claim compensation against any relevant parties or companies.

Compensation plan details:

  Buyer opts to complete agreement for sale & purchase Transaction cancelled
  Cash payment mortgage plan Stage payment mortgage plan /
Compensation arrangement Includes one-off subsidy and interest compensation# Includes one-off subsidy and interest compensation
Total compensation, based on a property price of HK$15 million HK$1.15 million HK$380,000 HK$310,000

# If the delay to the material date is longer than the estimated 9 months, the interest compensation will be pro-rated.