HK’s property sales agencies report their worst financial results in years amid triple whammy industry slump

30-Mar-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Hong Kong’s property agencies are reporting their worst financial results in years, as the coronavirus pandemic added to the woes of an industry that was already slumping from many months of anti-government protests and an unrelenting US-China trade war.

Midland Holdings, the city’s largest publicly listed network of sales agents, reported a blowout 2019 loss of HK$68.92 million that was more than double its forecast, while its non-residential property sibling Midland IC&I posted a HK$19.5 million loss. At the privately owned Centaline Property Agency, net profit fell 38 per cent last year to HK$388 million due to the double whammy effect of the protests and the trade war on its Hong Kong business.

“Coupled with volatility in the stock and bond markets, home prices will be dragged down,” said Midland’s chair Freddie Wong in a statement. “The number of negative equity cases and losses in transactions will increase. Unemployment rate … will continue to rise,” amounting to a “warning sound for the economic outlook” of the city, he said.

The downbeat numbers show how Hong Kong’s property industry is buckling during the city’s first recession in a decade. The city’s property agents are bracing for the long haul as a shrinking market with plunging prices has dented their take-home pay, forcing some of them to quit the industry.

Panicking homeowners had been dumping their property at losses, with at least 27 homes changing hands this month at less than their purchase cost, compared with 10 in January.

Three villas at the Valais community developed by Sun Hung Kai Properties (SHKP) in Sheung Shui sold for massive losses. A 1,841 sq ft villa sold for HK$20.8 million, 15 per cent discount to prevailing prices and a loss of HK$9.54 million, or 31.4 per cent, from its purchase price a decade ago.

Simon Kwok Siu-ming, executive chair and chief executive of Sa Sa International Holdings, sold a 1,240 sq ft flat at luxury project Leighton Hill this week at HK$56 million, 4.4 per cent cheaper than a similar flat in the same block that changed hands last May.

“Market sentiment has declined in the market for both new and used homes,” said Centaline’s Asia-Pacific vice-chair and residential division chief executive Louis Chan. “The market is worried about the escalating pandemic, and the market outlook is uncertain. People have cut back on going out to avoid catching the coronavirus,” which is forcing developers to postpone their launches, he said.

Midland swung to a loss last year, from a 2018 profit of HK$58 million. In its December 19 earnings warning, Midland said its accumulated losses for the first 11 months of its financial year was HK$25 million. The same happened at Midland IC&I, which deals in non-residential property sales, from a 2018 profit of HK$48.15 million.

“Every business is languishing, while the economy suffers from immense downward pressure brought by the trade war, political [protests] and the coronavirus pandemic,” said Midland IC&I’s chief executive Daniel Wong.

Hong Kong’s government should withdraw the measures that were previously introduced to cool the property market, cut stamp duty on commercial and industrial property from 8.5 per cent to 4.25 per cent to stimulate turnover, he said. The authorities should also waive property rates for small-and-medium enterprises, he added.

https://sg.news.yahoo.com/hong-kong-property-sales-agencies-114447252.html

 


Category: Hong Kong

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