Hong Kong real estate agents face tough times as home sales drop 39 per cent in first quarter
Candid Properties went through staff cuts, Qfang curtailed expansion in the city.
Hong Kong’s first real estate agency offering 0 per cent commission for clients is finding it tough to survive in the city with its weakening housing market.
Online real estate agent Candid Properties, saw staff numbers drop to four from 15 in six months.
“The market is bad, there are fewer transactions and fewer foreigners coming to Hong Kong,” said Alastair Hoyne, the founder and chief executive of Candid.
Hoyne, a former investment banker who was born in the UK, established the company in November 2015 with the ambition of revolutionising Hong Kong’s real estate business.
Rather than charging both client and landlord — an established practise in Hong Kong — Candid only charges owners, at a 1 per cent rate for sales and half of the month’s rent for rentals. For buyers or tenants, it is free.
Hoyne said he wanted to bring a “cheaper and better” service to consumers as he found the market in the city was monopolised by several big realters whose websites were not user friendly and had very few pictures and limited information. Those agents were being paid primarily on commission and not helping others find something within budget, he said.
The idea may have been mistimed because the market is experiencing a very rough patch.
Hong Kong home sales dropped 39 per cent in the first quarter compared with the previous three months, to an all-time low of 6,221 in the first quarter, according to Jones Lang LaSalle, an investment management company specializing in real estate.
Transactions are very weak, Hoyne said, in both second home and rental market as more owners are taking a “wait and see” attitude rather than cutting prices.
Furthermore, as Candid charges only half the fee, it cannot do co-brokerage with other real estate companies to access more landlords, Hoyne said.
The broker handles only 56 properties on its website currently, compared with 96 when the company was established.
Hoyne said the Hong Kong government should give more support to real-estate startups.
“I’ve been to Cyberport and Science Park to seek funding, but they are not interested in entrepreneurs tackling the property sector,” he said.
Hoyne said Candid may have to close if the transactions continue to be slow for another year.
But he said there would be successors and the future for online real estate agencies would be bright as more than 75 per cent of Hong Kong people are internet users.
Meanwhile, mainland China-based realtor Qfang, which describes itself as offering a fully-integrated customer experience through its internet service expanded to Hong Kong last June.
The company said it too has slowed its expansion in the city due to the struggling real-estate market.
“We’ve been very cautious. Originally we planed to open 200 branches in two years, but nearly one year on we have only opened 46 branches, ” said Vincent Chan Kwan-hing, Qfang’s managing director for Hong Kong.
Still, Chan said he is confident about the company’s growth in the city as it has strong financial backing from its parent company and has developed internet technology imported from the mainland.
The transactions Qfang handled in March increased 30 per cent from that in January, he said.
Chan said Qfang plans to connect its online platform in Hong Kong with the one on the mainland in order to attract buyers there to purchase properties in Hong Kong.
“Our target is to become the biggest real estate agency in Hong Kong in five years,” he said.