Economy

Markets

Industries

Insights

Reports

Events

Property: Realty agencies close amid cooling sales

By Jin Jing (China Daily)
Updated: 2008-08-27 11:29

The continuing cooling property sales in Shanghai have led an increasing number of real estate agencies to shut outlets.

The number of real estate agencies outlets in the city has reduced by more than half from the peak of 16,000 two years ago to around 7,000. Some large agencies even closed outlets located in the outer ring of the city, or the area with housing sales shrank sharply.

The Shanghai Mantanghong Real Estate slashed half of its 30 outlets in Pudong district, where luxury apartments gathered but sales remained stagnant.

Many property agencies that expanded quickly last year are also in the same position.

The Guangzhou-based Hopefluent Real Estate Holdings increased its Shanghai outlets from 14 at the beginning of 2007 to nearly 100 by the year end. But currently, it has already shut down 20 outlets, and the possibility for more outlets closing cannot be ruled out.

Having 25 outlets acquired by Century 21 Real Estate, Bobang real estate agencies' remaining four outlets in Shanghai were also shut down recently.

The Hong Kong-listed Midland Realty also reportedly cut its outlets from nearly 60 to around 40. "Profits of all real estate agencies slide in the first half, and loss is inevitable," a Midland Realty statement said.

Yan Pei, a saleswoman in Hongkou branch of Midland Realty, told China Daily that she had over three months with no housing sales.

"My five colleagues in the office left the job one month ago," said Yan. With the basic salary of 1,000 to 1,200 yuan ($145.94-$175.13) per month and no dividend got from housing sales, Yan said she would also consider leaving because with the salary it was hard to cover her daily expenses.

In addition, the over 80 sq m branch office needs to pay 10,000 yuan for rent per month. "It is a difficult time for the company to tide over because there is only net capital outflow," said Yan, adding that to attract more clients, the 2 percent real estate commission is also negotiable.

Statistics from China Real Estate Index Academy showed that the housing sales in the city in the first half dropped 27.6 percent year-on-year to 8.85 million sq m.

On the opposite street of Midland Realty located Shanghai Bright Real Estate. In the 50 sq m office, five salespeople sit idle. On the display window, there is a large paper posting the sales job vacancy. A salesman told China Daily that the slump industry has made many salespeople change jobs.

On the same street, the branch of eRehousing newly set up in July because of the low rent they can get when the market is gloomy. Wang Bin, a salesman of eRehousing, said that the branch only sold one apartment worth 2.5 million yuan so far. "Though many people will come here and look for apartments, only a small number are willing to buy houses at this moment," said Wang.

Xue Jianxiong, head of research at Shanghai Uwin real Estate Information Services, said the average monthly loss of each outlet of large real estate agencies in Shanghai was around 60,000 to 70,000 yuan.