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Mon, Nov 07, 2005 - Page 12 News List

HK property agents hustle amid weakening market

CONSOLIDATION Demand for residential property has flattened, with analysts saying rising interest rates are making it more costly to borrow, and deterring buyers

AFP , HONG KONG

Jovin Kwan cuts a dashing figure in his well-tailored suit as he darts through Hong Kong's smartest shopping malls, plying his trade as one of hundreds of young property dealers.

With a slick smile and a smooth patter, Kwan tails and hustles his target, jostling with salesmen from rival firms for the attention of Saturday shoppers who just might also be in the market for a new home.

Behind the cheeky smiles, however, there is a hint of desperation: Demand for apartments has been flat of late and his company -- and its competitors -- are pulling out all the stops to make a commission.

"For the past two weeks I've been here, I haven't closed any deals," the 21-year-old said during one of his 10-hour work days.

He works six days a week to sell the latest upmarket units at Harbour Green, a high-rise of harbor-view penthouses and apartments in the fast developing West Kowloon area.

After an economic revival, which lifted a gloom that accompanied the financial struggles for much of the past decade in Hong Kong, the residential property market again appears to be turning flat.

The market began consolidating in the third quarter after a rally in the first half of the year and the number of sale transactions in the three months to August fell more than 40 percent quarter-on-quarter.

Chief analyst at property agent Midland Realty, Buggle Lau, said rising interest rates are resulting in higher lending costs which has deterred prospective purchasers from buying.

Official figures show a decline of 0.9 percent in new mortgage loans applications during September to HK$8.5 billion (US$1.1 billion) and a further slowdown is expected in the short term.

"The sentiment has been a bit bad recently because of fears of bird flu and interest rate hikes; the stock market has consolidated so the property market has been affected," Lau said.

"Homebuyers and investors are cautious," he added.

The stock market had enjoyed strong gains in summer but Hong Kong has since followed the lead from the US in raising interest rates. Last week, Hong Kong's top banks hiked lending rates to a four-year high of 7.5 percent.

Sentiment has been further damaged by speculation that bird flu could mutate and spread, reminiscent of the SARS outbreak that killed nearly 300 people here in 2003 and devastated the territory's economy.

At the shopping mall, however, Kwan believes there are other reasons to explain why business is turning bad.

"There is more competition from other sellers and the quality of flats is getting better and so the prices are higher," said the former computer salesman who moved into property in the hope of making big bucks.

Flats on offer of between just 617 and 702 square feet -- according to the developers -- should fetch HK$3.32 million to HK$5.3 million.

"That makes it more difficult to sell," Kwan said.

As the market tightens developers are bolstering their strategies to lure buyers and boost their bottom lines. On any given day, up to a thousand salesmen, like Kwan, are deployed onto the streets, working shoppers like market hawkers.

Value has been added to the products in the form of ever larger and sophisticated residential clubhouses. Full page, color newspaper advertisements with celebrity endorsements are used to arouse interest.

And as interest rates and a consolidating stockmarket start to bite, not all in the industry believe the party is over. Jovin Kwan and his peers at the mall could yet make the big bucks he has dreamed of.

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