Opinion | Numbers show how real estate firms lost the plot
The fact is prices got out of hand and the industry expanded too far and too fast
There is a 200-metre stretch of Robinson Road in Mid-Levels that encapsulates much of what went wrong with Hong Kong's property market.
Between Mosque Street and the traffic lights by the junction with Seymour Road, well over half of all the shop spaces are taken up by real estate agencies. Indeed, some of the companies concerned have established multiple presences along this relatively short commercial strip.
And Robinson Road is by no means unique: the same picture is repeated throughout the city.
The answer, of course, is that a lot of small shops that used to provide goods and services for nearby residents have been driven out by rocketing rents. And the only people who can afford to pay the new sums being quoted are the property agencies themselves.
This absurd situation has been brought about by our old friends "market forces". As prices of residential properties went through the roof, so commission income - maybe one per cent each from buyer and seller - climbed too.
Five agents each selling two flats a month at an average price of HK$20 million would produce a kitty of HK$2 million in a single month. Even allowing for a generous share of the commission for staff; that still puts a big chunk of change at the disposal of the real estate company.
How to maintain or even expand your share of such a lucrative market? Easy - increase visibility at street level by taking up shop spaces, and when vacancies arise, do everything in your power to stop rivals forcing their way in by renting the empty spaces yourself.