Battening down the hatches
These are worrying times for Hong Kong's real estate agents. New mortgages fell to a 28-month low of 6,579 in September, according to data from the Land Registry. Monthly transactions have slumped by more than half - from about 14,000 recorded at the market's peak last year - after being hit by the double whammy of Chinese government measures to curb property speculation and the still unravelling financial turmoil, particularly in Europe.
There are roughly 33,000 licensed real estate agents in the city, though Denys Kwan, president of the Society of Hong Kong Real Estate Agents, says only about half of them are active.
Notwithstanding this, there are still about 16,000 agents fighting over 6,000 transactions per month - nearly three agents for one potential deal.
The dropout rate for new agents in the first year is typically around 50 per cent and a lot of them may now quit due to the market downturn, returning when the market rebounds, which is not the right approach, according to Kwan.
'Many of them seem to have the wrong impression - that selling property is very profitable and very easy. They think they only need to seal a couple of good deals to generate enough income for a year,' he says. 'There are only a few agents who can do that and those people have been in the business for many years. This business is not about luck but lots of investment in terms of time and hard work,' he adds.
The Society of Hong Kong Real Estate Agents seeks to promote its members' professionalism and profitability, and Kwan advises those in the trade to try to turn adversity into opportunity, and use downtime to bolster themselves against future challenges.
For example, they could take up courses to improve their knowledge and skills, or to further develop their relationships with existing and potential clients.
Louis Chan, managing director of residential sales at Centaline, agrees that industry professionals should grasp this opportunity to hone their skills.
Chan says the natural staff attrition rate at Centaline is 5-8 per cent per month, and with the market slowdown, he expects it to go up to around 10 per cent. He adds that Centaline, which has 4,000 staff, has no fixed plan to cut staff despite the downturn.
Chan points out that the right approach is to encourage staff to expand their horizons and look for business elsewhere, especially outside of Hong Kong.
'Cutting human resources is not the proper long-term approach. This is the time when we need to encourage staff to take up more training to better prepare themselves and push them to develop markets on the mainland and in Taiwan and Singapore.'
Kwan says it is important for prospective real estate agents to bear in mind that the property market is very much dictated by the 20-80 principle - which means 20 per cent of agents, usually the top and most experienced ones, will corner 80 per cent of the market, while the others will have to share the remaining 20 per cent of the pie.
Kwan says although Hong Kong's fundamentals are relatively strong, it is still not immune to external factors, such as the state of the global economy and continued downturn in the US and Europe.