Buyer interest props up mainland agency income
A change in investment patterns and continued enthusiasm from homebuyers have propped up commission revenue at some estate agents on the mainland.
Despite ongoing policy measures aimed at curbing demand in the property market, commission income at Centaline Property Agency's mainland operations' rose slightly to 320 million yuan (HK$373.14 million) in November from about 300 million yuan in the previous month, its group chief executive Sherman Lai Ming-kai said.
Without giving detailed figures, Raymond Kwok, chief executive of Midland Realty, said the Hong Kong agency's mainland business rebounded last month and demand from homebuyers remained strong.
But although deals are still being done, the cooling measures have slowed sales growth. Lai said that in March, before Beijing began introducing measures to cool the property market, the agency earned 390 million yuan in commission income. That proved to be the year's peak.
Revenues generated in second-tier cities such as Nanjing, Changsha, Huizhou, Dongguan and Changchun helped boost incomes last month, Lai said.
'There were more new projects released in those cities last month. And second-tier cities are not the major target of the measures. The measures will have greater impact in most first-tier cities.'
Shenzhen was the only major city to show a significant improvement in property market transactions last month.
'The impact of cooling measures in Shenzhen and Shanghai was below our expectations. Property transactions dropped only 20 per cent over the last two months, while deals in Beijing dropped 70 per cent,' Dickson Wong Hung, the chief executive of Centaline Property on the mainland, said.
Property investors meanwhile shifted their investment focus to commercial properties, Wong said.
'The cooling measures introduced in May and September did not cover commercial property transactions. As a result, an increasing number of investors are now shifting their focus to the commercial market, which offers higher rental yields,' he said.
Investors from Hong Kong, Macau and Taiwan - who previously targeted residential properties - were now buying commercial properties in Chengdu and Chongqing, Wong said.
'They have found that the tax rates in second-tier cities are lower. And offices in Chengdu and Chongqing offer a rental yield of 5 to 6 per cent, while rents are still rising.'
Centaline's Lai expects the firm's total commission income from its mainland operations to reach 3.2 billion yuan this year - just 5.9 per cent lower than the 3.4 billion yuan earned last year.
He was also optimistic about next year's business outlook.
'I don't think the agency business will be poor next year. Turnover will be higher than 2009 as we will continue to expand.'
Lai said the firm now operated out of 1,000 branches on the mainland, up from about 810 at the beginning of the year.
Midland's Realty's Kwok said buyers were back in the market in November and prices had not dropped significantly.
But he expects transactions to drop in January and February since the Lunar New Year is traditionally a low season for the property market.