Jones Lang exits Shanghai homes
Keen competition and modest margins have forced international property consultant Jones Lang LaSalle to close its residential agency department in Shanghai.
The property consultant plans to take a year to 'gradually phase out' of the residential leasing and sales market in the city, the company said.
More than 20 professionals and staff will be affected, a source said.
The decision to pull out of the Shanghai market came as the central government is expected to issue more austerity measures to cool the property sector.
It also came a few months after property agent City Integrated Residential Services, a member of surveyors firm DTZ Debenham Tie Leung, closed all four branches in Shanghai's Pudong district as the market slowed following the central government's decision to announce further austerity measures to cool surging home prices and imposed tougher restrictions on foreign buyers.
Major property agencies in Beijing including Golden-keys, Wo Ai Wo Jia and Lian Jia had also reduced branch numbers last year.
'Residential agency is more labour intensive compared with office leasing and sales business, implying that the margin will be lower,' said a senior executive at a property consultant firm in Shanghai.
'But so far we have not seen any consultant make such a drastic move as what Jones Lang LaSalle did,' he said.
'But it is unavoidable that foreign and local property agencies will continue to consolidate their business, as transaction volume is expected to slow amid the regulatory uncertainity.'
According to the National Development and Reform Commission, the average price of new homes in 70 major cities rose 6.3 per cent in December compared to a year ago. While prices in some cities such as Qinhuangdao, Shenzhen and Beijing reported a rise, Shanghai saw prices fall 0.1 per cent.
Jones Lang LaSalle did not explain why they decided to get out of the residential market.
But sources said it would concentrate on the commercial sector, which is the company's prime focus in the global market.
Jone Lang LaSalle established its residential department in 1994 and opened its first mainland office in Shanghai.