Two of Hong Kong’s largest property agencies have either cut headcount or seen staff members leave amid a slump in commercial property transactions.
Centaline Commercial and Midland IC&I have both shrunk their ranks by about 40 people each, as the city’s anti-government protests weigh on the sector. The total number of agents in Hong Kong fell 1.5 per cent to 39,526 last month from a peak of 40,142 in November last year, according to the Estate Agents Authority.
Daniel Wong, chief executive of Midland IC&I, said the departures had taken place over the past five months, and that further reductions would “depend on market sentiment”.
“It started in June. Transaction volumes have shrunk a lot, and we could not support so many people. When the market booms, we will have an excess of staff [which gives us] more chances of striking deals. But some cannot strike a deal the entire year. This is a time to ask them to leave,” he said. “Transactions will remain at a low level this month.”
The number of office, retail and industrial property transactions this year will be even lower than the earlier forecast of 5,200, which is already lower than the record in 1996, according to Midland IC&I. Only 1,281 deals were seen between July and October, down 55 per cent on year.
Wong attributed the decline to US-China trade war and the social unrest, which led to the city’s first recession in 10 years, as well as lacklustre global economy.
“Banks’ tightening of mortgage is also a reason,” Wong added. “Even some owners were willing to slash prices by 20 to 30 per cent recently, some deals could not be reached as the buyers could not have their mortgages approved.”
Reed Hatcher, head of research at Cushman& Wakefield echoed the view that transactions would remain low.
“The outlook for investment in commercial property in Hong Kong is likely to remain muted over the remainder of the year … under the current fog of uncertainty,” Hatcher said.
Stanley Poon, Centaline Commercial’s managing director, said the departures at the agency had taken place over the past three months and that the company now had about 600 employees.
He said the turnover for office, retail and industrial properties had shrunk greatly because of the protests, now in their sixth month, and was at a record low. “Our industry mainly relies on commission. If [agents] cannot do business, earn commission and only have their base salaries to rely on, they will not be interested in staying. So there is more of a natural loss [of headcount],” Poon said. “A minority will be those who can’t reach the company’s goals for a long time. We will ask them to leave if they are not suitable for the industry.”
He said the agency would not sack any more staff members as it needed a certain number to “cover such a large area”.
Joseph Tsang, chairman at JLL, however, said it was the agencies’ business models that were to blame for the departures.
“Centaline and Midland hired too many people and are oversized, if you ask me. There are too many people,” he said. “We don’t have this kind of scenario, as our efficiency is much higher. We only have about 30 people working in investment. They have hundreds. It is a different world. It is easier for us to tread such a bumpy road or stormy season.”
Tsang was unsure if JLL itself would let go of staff or not, but said “it is a fact that the market is very bad.”
Agents thus let go could consider changing track and move to the residential sector. Sammy Po, chief executive of the residential division at Midland Realty, which has 4,000 employees, said the division had no plans of firing agents, and instead was recruiting people as the secondary market had started to boom after a relaxation in mortgage requirements was announced mid-October.
“We hired 200 more people in the first half of this year,” Po said. “If the [commercial agents] are not interested in staying or the [commercial] market is too downbeat, we will also absorb commercial agents into the residential division.”
Elsewhere, Road King Infrastructure announced the price list for the first 67 units at its Crescent Green development in Yuen Long. The flats are priced at an average of HK$10,973 per square foot after factoring in a discount of about 18 per cent. The selling price is about 15 per cent lower than that of the Park Yoho development nearby, which went on sale three years ago.
The first batch of units range in size from 916 sq ft to 970 sq ft, and are priced at between HK$9 million and HK$11.84 million.
More from South China Morning Post:
- Hong Kong’s homebuyers greet developers’ attempt to sell leftover residential property with their collective cold shoulder
- Land contributed by third-largest developer can house “some 40,000” people in transitional housing