Rivals taking agency merger in their stride

PUBLISHED : Wednesday, 12 April, 2000, 12:00am
UPDATED : Wednesday, 12 April, 2000, 12:00am

Midland Realty (Holdings') decision to buy Hong Kong Property Services (Agency) and form the SAR's biggest property agency does not pose an imminent threat to competitors, according to other agents.

Arch-rival Centaline Property Agency managing director Shih Wing-shing said the company would react swiftly to fend off competition if the merger produced new marketing strategies.

'I do not see any severe threat to our business at the moment,' he said.

Mr Shih believed the combined commission earned by Midland and Hong Kong Property would be close to Centaline's HK$900 million last year.

He said he was confident Centaline, which has 160 branches, would sustain its market share of between 20 per cent and 25 per cent. Midland and Hong Kong Property will operate 173 branches.

Fortune Realty managing director James Tin said he did not worry about losing business after the merger.

He said the Midland and Hong Kong Property deal would not help their business much as many of their branches overlapped.

Mr Shih also believed Midland's commission revenue would not be significantly boosted by the acquisition given Hong Kong Property's weak results.

But the deal allowed Midland to seek strong backing from Hong Kong Property's previous owner Cheung Kong (Holdings), he said, adding that Centaline had no plan to bring in a developer as a shareholder.

Centaline yesterday increased its commission-sharing ratio with employees to a uniform 30 per cent. The rise is exclusive to deals closed in the primary market.

At present agents share 10 per cent to 35 per cent of commissions in the primary market, subject to transaction value.

Mr Shih said the commission-sharing ratio for the second-hand market remained unchanged.

The new practice was in response to Hong Kong Property's policy of allowing agents to share 60 per cent commission from transactions closed in the first-hand market, he said.