Franchise players target HK
Booming luxury market lures global firms Sotheby and Engel & Volkers
The red-hot luxury residential market in Hong Kong appears to have triggered a new round of competition in the property brokerage industry with at least two international real estate franchisers planning to make their first forays by selling franchise rights in the city.
In anticipation of a stronger market outlook in the luxury sector this year, local estate agents, after cost-cutting last year, are poised to recruit more staff and increase branches to grab a bigger market share.
Sotheby International Realty, one of the world's major real estate franchisers, said it was planning to select a local partner to work with, in order to develop and launch the company's international brand.
'Hong Kong and mainland China are the main focus for Sotheby's International Realty,' said Scott Schubiger, vice-president of Sotheby's international development.
'We view Hong Kong as a tremendous opportunity. We are very interested in Hong Kong, which is the Manhattan of Asia,' Mr Schubiger said. 'We are now in talks with a number of potential candidates.'
Engel & Volkers, which specialises in the high-end residential sector, said it was seeking local firms to buy licences or franchises to establish outlets in upmarket locations such as the Peak, Happy Valley, Island South and Kowloon Tong.
In the face of new rivals, homegrown property agents and international property consultants which have set up offices in Hong Kong for years said they would not be threatened by newcomers and were ready to take the challenge.
'Hong Kong is a mature market and a difficult market for a newcomer,' said Colin Fitzgerald, the Asia-Pacific managing director of Knight Frank.
Joseph Tsang Hon-ping, an international director and head of residential at Jones Lang LaSalle, said that instead of a big brand, good people and good connections were more important in the property brokerage business in the luxury market.
'The profile of buyers has been changing in the past six to seven years. Buyers of luxury homes in traditional prestige address have changed from wealthy foreign buyers to a wide variety of mainlanders or locals who used to live in North Point [mass housing area],' Mr Tsang said.
'The market is very competitive already, not only from international consultants, but from homegrown agents which have strong branch networks.'
'It is sensible that international companies will look for opportunities in a growing market in Hong Kong,' said Shih Wing-ching, the chairman of Centaline (Holdings), which controls Centaline Property Agency.
'We will not sit here to let rivals grab a bigger market share, we will expand to maintain business growth and fend off competition.'
Midland Realty executive director Vincent Chan Kwan-hing said the firm would increase frontline agents and was likely to expand the number of branches by 5 to 10 per cent this year. Midland now has 3,000 agents and 221 branches in Hong Kong.
Peter Yuen Chi-kwong, Savills' senior director of investment and residential sales, said the company had increased staff numbers by 15 per cent since the beginning of the year and would continue to recruit in view of the good market outlook.
The luxury market was highly active in the first quarter with a number of record-breaking deals. Earlier this month, one of the 22 houses at 8 Severn Road on the Peak, developed by Sun Hung Kai Properties, fetched a record HK$38,500 per square foot.