Real estate outlets are mushrooming at housing estates and developments in a fierce show of rivalry Real estate agents are making their presence strongly felt on housing estates, even elbowing out long-time occupants of commercial spaces in order to set up shop. At Lido Garden, in Sham Tseng, for example property agencies have moved in at the ground level to take up space once occupied by a bakery, a Chinese herbal store and a beauty salon. The landlord, Cheung Kong (Holdings), decided to reorganise the trade mix of the 12 ground-floor shops in Lido Garden in order to generate a higher rental income. The ongoing sale of Wharf's Bellagio Phase Three, located next to Lido Garden, has prompted prospering real estate agencies such as Centaline Property Agency and Ricacorp Properties, as well as other smaller operators, to move fast into the shopping mall and take up retail space. A similar scenario is unfolding a few blocks away: ParknShop at Rhine Garden has been scaled down in size to make way for property agency Midland Realty. 'There are 16 real estate agencies along the Sham Tseng section of Castle Peak Road,' said Louis Chan, executive director of Centaline Property Agency, which has four branches in the district. Freddy Wu Yat-fat, chief executive at Hong Kong Property Services (Agency), which has two branches in Sham Tseng, said shop rents at Lido Garden had more than doubled to $100 per square foot since the new trade mix was introduced. 'It is too expensive for us,' he said. The shops at Lido went to the highest bidders among property agents in a close tender,' he said. Lido Garden is just a fraction of the neighbourhoods that have seen aggressive expansion on the part of property agents. According to figures from the Estate Agents Authority, by August, the number of estate agent branches had risen by 350 outlets to 3,686 compared with 3,341 last year, and 2,982 in 2003. With transactions soaring 86 per cent to $351.79 billion last year, realtors swung into their high-powered expansion drive early this year. This year Centaline Property Agency has added 40 branches to boost its chain to 300. Its associate Ricacorp Properties has enlarged its network to 150 outlets from 80. Rival group Midland Realty has expanded its chain to 244, after opening 37 branches since January. It will set up 10 new branches by the end of the year. Its subsidiary Hong Kong Property Services (Agency) has opened 30 stores, bringing the total number of outlets to 90 so far. Despite the hectic pace of real estate branch expansion, the competition for retail space was not as fierce as it was during the 1997 market boom, agents said. 'There are fewer players after the market slump,' said Simon Cheung Yick-wai, executive director at Centaline. At present, nearly 70 per cent of the market share is controlled by Centaline Property Agency, Ricacorp Properties, Midland Realty and Hong Kong Property. He said the number of estate agent outlets was still lower than the 1999 figure of 4,200. 'And the rent rate isn't as crazy as it was in 1997,' he added. Midland Realty holds the record for paying the highest rent for an outlet - $420,000 a month for a shop at Wonderland Villas in Lai King, near Kwai Chung during the market peak of 1997. Vincent Chan, executive director at Midland Realty, said the company would not pursue expansion at such 'outrageous' cost. 'We will be more cautious,' he said. Today, a monthly rent of $200,000 to $300,000 for a new outlet is considered the upper limit. Agents are wary of repeating their blind expansion strategy of eight years ago. 'Only a few of our outlets are being charged relatively high rents - most are reasonable,' said Mr Chan of Midland. But real estate agents are still the darlings among the landlords of retail shops. Landlord are less likely to soften their asking rents for real estate agents who have adopted a high-rent policy in order to weaken the market share of rivals. 'Our industry never enjoys low rents,' said Ivan Ho Shui-cheong, managing director at Ricacorp. 'Some of our rivals will pay a high premium for shops in strategic locations just to secure their presence. We have to play the game if we want to compete.'