Battlefield spoils for a seasoned warrior

PUBLISHED : Wednesday, 17 March, 2010, 12:00am
UPDATED : Wednesday, 17 March, 2010, 12:00am
 

The Hong Kong property market has long been famed for wild swings in prices and its ability to present buyers with unusually large gains or losses depending on their points of entry.

As with most markets around the world, the investment notion of property as a 'safe haven' might apply in the case of Hong Kong in the long term. But beware the intermittent typhoons.

Small wonder then, that the real estate agents who have lived to tell the tale of broking deals in this turbulent market regard themselves as seasoned warriors.

'The market turns into a battlefield whenever a new residential project is offered for pre-sale by developers - particularly the big ones,' Sammy Po Siu-ming, New Territories director for real estate agency Midland Realty.

Fresh out of secondary school, Po began working as an estate agent in Midland at the age of 22 in 1988. He tried waiting tables and sales work at first but was drawn to the real estate business because of the industry's prospects.

'I also believed I could make good money as an agent,' said Po, who first started broking flats at Midland's Island East branch, and gradually climbed the career ladder to take charge of New Territories business in 2002.

It turns out he did make money, and Po is now a substantial property owner in his own right, having bought his first home - a modest 400 square foot Home Ownership Scheme unit in Chai Wan for HK$400,000.

He then accumulated six properties, two of which are occupied by his family and his mother respectively, in Hong Kong. Three units are leased and the transaction for another has not been completed.

Po credits much of his success in property investments to the determination of a struggling young couple to buy their own home.

'I had just begun working as an agent and a young couple who worked in dim sum restaurants came into the office to check the listings of flats in the area,' he said. 'They did not earn much, but they had saved every cent they could and after years of sacrifice they had finally saved enough to buy a unit. I sold them a flat in Heng Fa Chuen for HK$600,000 and they were very, very happy.'

For Po the enduring lesson was that everyone, no matter how poor, wants to own their own home and this means that while prices might go up and down in the short term, over the long term property is a sure bet.

That enthusiasm for buying property was on display last month in Yuen Long when developer Sun Hung Kai Properties (SHKP) released units in Yoho Midtown for sale.

'It was the biggest residential project put on sale so far this year,' Po said, and Midland, which has more than 2,000 agents on its books, mobilised almost half of its sales force to sell the project to buyers.

It succeeded in selling more than 500 of the units, accounting for 41 per cent of the total 1,200 flats snapped up by homebuyers in two weekends.

Under the terms agreed by SHKP, Midland, which sold the largest number of units, received 2.5 per cent of the flat values as commission while other agencies received 2 per cent, and earned about HK$70 million in commission revenues in two weekends, Po said.

The performance did not come without some cost, however, and to prepare for the release of the project Midland opened a new branch close by six months before selling began.

The branch did not come cheap, Po said, and rent amounted to HK$100,000 per month.

On top of that, the company also arranged for 20 minibuses to ferry potential buyers from different parts of Hong Kong to the sales office in Yuen Long.

'And then we worked until 3am or 4am as agents continued to escort potential buyers to the sales office even after midnight,' he said.

The buying enthusiasm came as no surprise to Po, who said property would always remain his first choice when it came to making an investment.

Some of his properties, which are spread between Hong Kong Island, Kowloon and the New Territories are freehold. Others have outstanding mortgages, but all generate rental income and in the meantime are appreciating in value, he said.

'They will provide rental income, but I will also enjoy capital appreciation.'

Po has avoided losses on his properties because he has not sold when prices have fallen - a luxury he has been able to afford because he has not over-reached himself.

'I was always careful not to take on too much debt,' he said.

In the present market conditions, says Po, first-time homebuyers would do well to focus on the secondary market rather than new developments, which are selling at much higher prices.

'There are plenty of choices in the secondary market and these flats are offered at affordable prices,' he said.

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