Hong Kong’s Real-Estate Brokers Feel the Chill; Hong Kong is home to more than 6,000 real estate offices, whose numbers eclipse even that of the city’s 7-Elevens and McDonald’s

March 25, 2013, 6:24 AM

Hong Kong’s Real-Estate Brokers Feel the Chill

The armies of young real-estate agents that flood Hong Kong’s shopping malls on weekends could see their ranks thinning out in the coming months, the chief analyst at Hong Kong’s largest listed real-estate broker says.

Thanks to the government’s latest round of cooling measures, transactions across the city have dropped dramatically, Midland Realty’s Buggle Lau said Thursday. Since late February, when the government doubled the stamp duty on most property purchases, transactions on the secondary market at the city’s 10 most popular housing estates have plummeted to as few as four or five on recent weekends, Mr. Lau said. By contrast, a year ago, there were closer to 100 transactions per weekend, he said.

As property prices have ballooned by 120% in recent years, Hong Kong’s real-estate offices have become even more common a sight than the city’s 7-Elevens and McDonalds, as thousands of salesmen have jumped in on the bonanza. There are more than 6,000 such offices in Hong Kong, with 300 of them opening their doors in just the past year.

On weekends, throngs of suit-clad agents—who have been known to get into actualfistfights over their turf—throng the city’s crowded commercial districts, passing out slick pamphlets to prospective customers.

“The markets have cooled down significantly,” said Mr. Lau. “Transactions are so low that if the current situation continues, across the whole industry, agents may be out of jobs.” If the government doesn’t relent on its efforts to tame property prices further, he said, up to 30% of agents across the industry could see their positions scrapped.

Across the industry, companies have laid off about 10% of property agents since October, when the government slapped a 15% tax on non-local buyers, says Denys Kwan, a council member of the Society of Hong Kong Real Estate Agents Ltd., an industry association.

A Midland spokesman said the company hadn’t laid off any workers since October. However, as many as 12,000 real-estate agents across the industry could get laid off if the government continues to try to tame the market, the spokesman said.

Mr. Kwan says that even if the government doesn’t do more to curb demand, unless sales pick up many offices will be forced to close. “Some of them can’t just close up the shop and walk away right now, because of their lease,” says Mr. Kwan. “There are quite a number still hanging on. But in a few months’ time, they will also close down, and you will see more people losing their jobs.”

Cecilia Cheung, who has been a real-estate agent in Hong Kong for five years, said that poor sales have caused stress among her peers, forcing them to pound the streets harder, make more calls, come into the office earlier and stay later. “All the agents are competing for less business now, so we have to do more work,” says Ms. Cheung. “The market is very quiet now.”