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Hong Kong's property market takes hit from Cathay job cuts
CALLS from laid-off Cathay Pacific Airways pilots began arriving at OKAY Property Agency not long after the Hong Kong airline announced one of the biggest job cuts in global aviation.
The cull that affected more than 5,000 Cathay employees on Wednesday has forced some to find cheaper housing or leave Hong Kong altogether. It is a painful blow for one of the city's biggest workforces, and yet another hit for a property market under pressure from political turmoil and a pandemic-induced recession.
Vacancies for apartments priced at HK$65,000 (S$11,382) a month or more had already been rising in Discovery Bay, a neighbourhood about 30 minutes from the airport that is home to many pilots, said Nina Schulte-Mattler, a senior manager in the residential division of OKAY Property. In Tung Chung, another area popular among Cathay employees, about 60 renters have surrendered their leases over the past three months, said Joe Lee, a senior area sales manager at Midland Realty.
"I've never seen so many people giving up their rented apartments in my career," he said. "Local crew members who were let go or had their salaries cut are terminating their leases." Cathay's shares fell 3.4 per cent to HK$5.7 in Hong Kong - the most in a month.
Hong Kong's flagship airline had introduced an unpaid leave programme for staff earlier in the year as monthly losses climbed to as much as HK$3 billion. In addition to announcing the job cuts on Wednesday, it said executive pay reductions will continue, and a third voluntary leave plan for ground staff will be introduced in the first half of next year.
The layoffs and compensation cuts will weigh on demand in one of the world's most expensive housing markets, especially after the city recorded the highest jobless rate in 15 years in September.
Rental prices in Tung Chung have dropped 5 per cent since the start of the year and may fall another 3 per cent in the fourth quarter, said Mr Lee. The majority of rental demand in the neighbourhood comes from airline crew members, employees with logistics companies, and other professionals related to aviation.
The industry is also well represented in Discovery Bay, popular for its tree-lined streets and waterfront apartments.
Some landlords in the area are now happy to find takers at HK$85,000 for properties previously going for HK$110,000, Ms Schulte-Mattler said, adding that a few pilots who used to lease those high-end units have left Hong Kong for jobs elsewhere or retired early. Others have downsized to the HK$40,000 to HK$60,000 price range, where demand is more stable. BLOOMBERG