Despite warnings from locals, global agencies persist with Hong Kong expansion plans
International real estate agencies continue to expand in Hong Kong as their local counterparts warn they may have to shut offices and lay off staff due to declining home sales.
Government measures aimed at curbing demand and price growth in the market, such as the doubling of stamp duty introduced on February 22, have led to a significant drop in home sales and a softening of prices.
Average monthly sales have fallen from 10,096 more than six months before the government introduced the measures in February this year, to 5,489 in July - a drop of 46 per cent; average prices have fallen by 1 per cent since February.
Data from the Estate Agents Authority show 36,889 people had either an estate agent's licence (which enabled them to operate independently or as a salesman employed by an estate agency); or an individual licence, which meant they could only work for a licensed agency.
Since 5,489 properties, including flats, car-parking spaces, and commercial real estate were sold in July, if each deal was closed by a different agent, that means just 15 per cent of licensed agents or salesmen completed a deal and earned commissions.
Midland Realty's managing director, Pierre Wong Tsz-wa, said the firm had yet to lay off staff, but added that "the whole industry will need to downsize if the poor market sentiment continues or worsens".
Shih Wing-ching, founder of Centaline Property Agency, said last week that the firm would have to lay off staff if the doubling of stamp duty was not vetoed when the Legislative Council resumes its sitting in October after the summer recess.
However, Engel & Voelkers, an agency based in Hamburg, Germany, said it was expanding its Hong Kong operation. "We have grown our staff size by 25 per cent to 25 agents in the past three months and plan to grow to a total staff of 50 in the next 12 months," said Chris Liem, owner and principal of the firm's Hong Kong unit. The sales team he has assembled comes from as far afield as Mexico, represents 12 different nationalities, and speaks more than 10 languages.
"The agents we already have appointed and are looking for must understand not only the local Hong Kong property market, but also global market trends to be able to foresee where the next valuable overseas opportunities will arise," he said.