Hong Kong property broker Centaline says upstarts like Snapflat are no match for its muscle power
Snapflat’s CEO says that with its nimble business model it can sign up far more rental agreements compared to traditional real estate brokers
A 17-month rally in property prices and strong sales of new projects has been particularly profitable for housing agents in Hong Kong, allowing some online start-ups to challenge well-established agencies for a slice of the market.
The latest newcomer to the party is Snapflat, which was launched this year.
Letting tenants find flats for free to increase demand and paying the departing tenants 15 per cent of rent if they let potential tenants view the flats to minimise vacancies is how Snapflat tries to differentiate itself, according to Eric Satzger, the company’s co-founder and chief executive.
“Landlords don’t care which agency strikes the deal. They often list their flats at many agencies to have their flats leased as soon as possible,” Satzger said.
“For the moment, as viewings are guided by departing tenants, with only three agents and one web developer, we are able to sign more than 30 tenancy agreements in one week. Traditional agencies usually can only sign two to three tenancy agreements per week with a team of 10 agents.
“We are trying to challenge big agencies in mid to long term,” he said.
But this is going to be difficult because the city’s real estate brokerage business is dominated by two agencies – Centaline Property Agency and Midland Realty Holdings – which compete head to head for as much as 50 per cent of the first month’s rent and one per cent of transaction prices.
Other new online agencies include Home Republic and even mobile applications that feature “no commission” but only monthly listing fees such as 28Hse, Gohome and 591. However, the online players have failed to bring about a change in the market so far.
Centaline shrugged off the challenge from these small agencies.
“We offer many services that small agencies cannot afford,” said Louis Chan Wing-kit, Centaline’s managing director for residential department. “We have invested billions on our online platform, indices, property price databases, virtual reality and 360 degrees flat viewing to let clients compare and choose flats easily.”
But market observers said on the rental side, small new companies may be able to challenge existing major agencies.
“Big brokers now put more focus on primary sales because of higher and more profitable agency fees,” said Thomas Lam, head of valuation and consultancy at Knight Frank. “The market structure of rental agencies may change if the primary market is still active as big brokers will need to put more resources and manpower on new project launches instead.”