Cathay Pacific job cuts slash Hong Kong’s property rentals

Grounded: Cathay Pacific aircraft at Hong Kong International Airport. The airline has cut about 5,300 jobs based in Hong Kong, affecting the property market there. — Bloomberg

HONG KONG: Calls from laid-off Cathay Pacific Airways Ltd pilots began arriving at OKAY Property Agency Ltd 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’s 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 (RM34,793) a month or more had already been rising in Discovery Bay, a neighbourhood about 30 minutes from the airport that is now home to many pilots, says 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, according to 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, ” Lee says. “Local crew members who were let go or had their salaries cut are terminating their leases.”

Cathay’s shares fell 3.4% 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$3bil (RM1.6bil).

In addition to announcing the job cuts, Cathay says 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% since the start of the year and may fall another 3% in the fourth quarter, according to 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 (RM45,500) for properties previously going for HK$110,000 (RM58,881), Schulte-Mattler says. A few pilots who used to lease those high-end units have left Hong Kong for jobs elsewhere or retired early, she says.

Others have downsized to the HK$40,000 (RM21,411) to HK$60,000 (RM32,117) price range, where demand is more stable.

Senior employees of Cathay Pacific or its subsidiary Cathay Dragon can receive HK$60,000 (RM32,117) to HK$100,000 (RM53,528) in monthly housing allowances, says Rickie So, a property agent with Century 21 Newcourt Realty in Discovery Bay.

He has seen about 50 properties in that price range drop their rent by 15% to 20% in the last two months in anticipation of layoffs. Newer pilots have been renting for HK$15,000 (RM8,029) to HK$20,000 (RM10,705). Further price cuts could start emerging in a couple of months, So says. — Bloomberg

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