Midland Realty (Holdings) chairman Freddie Wong Kin-yip says up to 30 per cent of the 5,000 real estate agencies in Hong Kong will be forced to close next year due to the sharp correction in the property market. Sales director Victor Cheung Kam-shing said only 1,500 of these agencies were large enough to weather the storm in the property market with most agencies highly exposed to the downturn. Mr Wong said property transactions had plunged 50 per cent in the past 10 days after the stock market crash and rises in mortgage lending rates. Shih Wing-ching, managing director of one of Hong Kong's largest property agents - Centaline Property Agency - said business had halved in the past week and a half. 'Banks have confidence in the property sector but mortgage deals are simply not profitable,' he said. Mr Wong said: 'Many small agencies opened in areas such as Mei Foo Sun Chuen this year and they will be hit hard by the market downturn.' Mr Cheung said about 20 of the 100 real estate agencies in Mei Foo Sun Chuen had closed recently and he expected more closures to follow. He said the buoyant market in the first half of this year would offset a disappointing second half for larger agencies, with commission revenue at Midland in the January to June period hitting $1.2 billion, higher than for the whole of last year. Mr Wong said the company had slowed its expansion when the market started correcting in July. 'We will be cautious in exploring new areas like Tung Chung and concentrate our efforts in strategic locations with potential growth districts like Tseung Kwan O,' Mr Cheung said. The luxury housing sector had been hit the hardest by the downturn with transactions down between 15 and 20 per cent, while sales of small to medium-sized flats had decreased by about 10 per cent, Mr Shih said. He said property prices should find some support after the Lunar New Year, a traditional peak season for property buyers after the year-end bonuses. 'Nevertheless, doubts loom over the Government's promise of increasing supply.' The Government has said it will supply 166,000 flats by the year 2000 although annual demand is seen at about 120,000 units. 'That will depress prices and the market will collapse,' Mr Shih said.
