Midland real estate agent posts worst interim results in four years as Hong Kong market hit by coronavirus and social unrest

Midland Holdings, one of Hong Kong’s largest real estate agents, lost HK $ 24.3 million (US $ 3.1 million) in the first half, a reversal of HK $ 94 million profit it had announced a year ago and its worst interim results since 2016.

Revenue fell by around 15% to HK $ 2.5 billion during the period, reflecting the uncertain conditions it has had to operate under as the city grapples with an unprecedented recession. The economy has been crippled as the coronavirus pandemic has compounded the damage already done by social unrest last year.

In 2019, Midland recorded an annual loss of HK $ 69 million.

His brother in non-residential real estate, Midland ICI, also reported a loss of HK $ 7.8 million during the period, compared to a profit of HK $ 21 million a year ago. Income plunged by more than half to HK $ 141.4 million.

While the measures to stem the spread of Covid-19 have been relatively effective, they have brought business operations to a halt that have reduced the company’s income and triggered pay cuts and layoffs for many workers.

“The net loss recorded during the reporting period is mainly attributable to the adverse market conditions caused by the unprecedented Covid-19 pandemic and the associated control measures in Hong Kong and mainland China,” the company said in a document filed on the stock exchange.

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These measures, he added, resulted in a significant drop in house prices and transactions from January to June.

“The initial Covid-19 epidemic in early 2020 particularly affected the primary residential market. In addition to potential buyers adopting wait-and-see attitudes, disease prevention and control measures such as the ban on group gatherings imposed by the Kong government has made developers hesitate to launch new projects, ”said the society.

“During the three month period from February to April 2020, only a few new projects were launched. “

New home sales and prices both fell by about half in the first six months of the year, according to land registry data.

Midland Chairman Wong Kin Yip predicts a 19% drop this year in the number of new homes changing hands to 15,000 and a 4% increase in side deals.

“As the pandemic is brought under control and Hong Kong’s borders have opened, capital can flow from [mainland China]”He said.” House prices could see a U-shaped rebound in the fourth quarter and a 3-5% increase in 2020. “

In July, a resurgence of Covid-19 cases in Hong Kong further dampened the local residential market, with transactions falling 12% month-on-month to 6,133.

House prices have also continued to decline. Since the start of the month, nearly 30 residential deals have been sold at a loss, according to agents.

A mainlander sold a 2,011 square foot Valais villa at Kwu Tung, near the Lo Wu border, for a loss of HK $ 5.46 million. The owner paid HK $ 33.46 million in 2010 and sold it for HK $ 28 million, or HK $ 13,923 per square foot last week.

In Kowloon City, another owner sold a 628 square foot unit to Billionaire Avant at a loss of HK $ 500,000. The unit is sold for HK $ 10.8 million, which is about 9% below the asking price of HK $ 12 million.

“We expect the prices of mass and luxury residential properties to fall by around 5% in 2020,” according to the latest Knight Frank report.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice on China and Asia for over a century. For more SCMP stories, please explore the SCMP app or visit the SCMP Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.

Penny D. Jackson