Hong Kong property agency taps family offices for growth amid downturn

ONE of Hong Kong’s biggest property agencies is expanding its family office services, as it looks for new avenues of growth amid a downturn in real estate.

Centaline Wealth Management, the subsidiary of Centaline Group, is seeking to manage US$1 billion in assets on behalf of rich clients within 12 months, Kelly But, the founding partner of the family office division, said on Wednesday (Jul 31) The company is trying to use its real estate network to tap clients who have US$3 million to US$5 million in assets, But said.

The company’s family office and private wealth department, which was set up last year, will provide services including asset allocation and alternative investment.

The decision comes as Centaline is seeing a shrinkage in its core business across Hong Kong and mainland China, due to the region’s property slump. The company’s staff has dropped by about 67 per cent to 20,000 people compared with three to four years ago. Its outlets have also halved to about 1,200.

Several mainland developers, including China Evergrande Group, owe about two billion yuan (S$370 million) in commission fees to Centaline, said Shih Wing-ching, who co-founded Centaline in 1978. That’s double the amount in August last year. The company was unable to pay commissions to some of its staff since these fees were typically handed out after the firm received money from developers.

“We might not see immediate results from the new businesses, but we will work hard,” said Shih, who estimates that the company’s business in Hong Kong has shrunk by about 30 per cent, and halved on the mainland.

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Centaline has branches across mainland China, Hong Kong and Macau. It also has been expanding its footprint in Singapore and Taiwan.

Centaline will be facing strong competition in wealth management, as banks and other service providers beef up operations in Asia. Hong Kong had more than 2,700 single-family offices based in the city last year, following the government’s push to bolster its status as an Asian wealth hub, according to a Deloitte survey. The city is also winning back wealthy Chinese by rolling out the red carpet for the rich while rival Singapore scrutinises foreign money. BLOOMBERG