Hong Kong realtors never had it so good, hiring record number of agents in city’s real estate boom
Up to 38,042 property agents are now licensed to work in Hong Kong, with the number set to rise as the city’s two dominant agencies Centaline and Midland hire aggressively to expand.
Hong Kong realtors have never had it this good. The city’s two dominant realtors are opening a record number of branches and offices throughout the city, taking advantage of a real estate boom that’s sent prices to records month after month, boosting their fee income.
Developers are scheduled to bring a record 19,000 new apartment units to market in the second half, prompting agencies to hire aggressively to bulk up their sales force in preparation for the additional supply.
As many as 38,042 property agents are now licensed to work in the city, according to the Hong Kong Estate Agents Authority. The number of applicants have risen for three straight months, as agencies aggressively expand to gear up for growth.
“We’re accelerating our scale as it’s now a winner-takes-all market,” said Centaline Property Agency’s residential managing director Louis Chan, who’s expanding his sales force by 8.6 per cent to 6,300 agents in 440 offices by the year’s end. “In Tsuen Wan alone, we added 10 branches this year, mostly next to the exits of the Tsuen Wan West” subway station, he said.
Centaline’s main competitor Midland Realty is keeping up, adding 23 branches to its network this year, with another 37 in the pipeline. The agency is aiming to expand its sales force to 5,000 agents across 300 offices by the year’s end, said its residential department chief executive Sammy Po Siu-min.
“We’re pushing forward our fast expansion, and hopefully can get 40 per cent market share in the primary market by the year-end,” he said.
Hong Kong agents’ commissions typically range between 2 to 4 per cent of the sales price of new apartments. For second-hand units, the fee is 1 per cent of the sale price, paid by both the buyer and the seller.
Business has been good for both Centaline and Midland. Centaline is aiming for HK$4 billion in commission revenue this year, a 14 per cent growth from a bumper year in 2016. Midland’s fee revenue last year jumped 30 per cent to HK$5 billion (US$639 million).
Real estate and construction contribute a combined 10 per cent to Hong Kong’s gross domestic product (GDP) in 2015, according to government data, with the property industry employing 130,000 people, or 3 per cent of the city’s work force as of March.
June was a record month for the world’s most expensive residential property market, with prices rising for 15 consecutive months, soaring 21.6 per cent from the same period last year, according to Hong Kong’s Rating & Valuation Department.
Buying was whipped up to such a frenzy this year that some developers had been able to sell their projects in phases, increasing prices by up to 20 per cent between the phases within weeks of each other.
Centaline’s Chan sees another 5 per cent upside in home prices until the end of 2017, as the market expects a delay in the pace that the US Federal Reserve will raise interest rate, which will evoke a lockstep response from Hong Kong’s monetary authority to maintain the Hong Kong dollar’s currency peg.
The agency is focused on expanding in the New Territories, home to half of Hong Kong’s population of 7 million people. Cheung Kong Property has its Ocean Pride and Ocean Supreme complexes here, as does Chinachem Group with its Parc City apartments.
Midland is also eyeing the New Territories, especially around the Ma On Shan area, where it’s just spent HK$10 million on a 3,000 square feet flagship office, adding to the nine it already has there. The city’s transactions could surpass 10,000 units in the second half, 3 per cent more than the first half, Po said.
“The purchasing power is far from absorbed, as long as developers cut prices, they will rush to the market,” he said.
Both Centaline and Midland now focus on the primary market, selling newly built units, as they make up the majority of transactions this year.
Still, for the smaller realtors operating in the city, small and steady is the strategy.
“Transactions could slow down as property prices are already too high,” said Vincent Chan, managing director at Qfang Network (Hongkong) Agency, a China-based realtor which operates 40 branches in the city. “Government tightening measures are unlikely to be cancelled anytime soon.”
Operating in Hong Kong since 2015, Qfang has already abandoned its ambition to open 200 offices within two years, instead shifting its strategy to developing an online platform to better serve buyers from the mainland.
“Our advantage is integrating resources in mainland and Hong Kong,” Chan said.