Beijing curbs force agents to axe 700 outlets
The downturn in the Beijing property market and a sharp fall in commission revenue forced the closure of 12 per cent of the capital's property agents, after home-purchase restrictions killed demand, a survey said.
Homelink, one of the largest property agencies in Beijing, said 700 agency outlets had closed since the municipal government restricted residents from buying more than two homes to curb demand and price growth.
The number of property agency outlets dropped to 5,310 last month, down 12 per cent from 6,029 in February, it said.
With only 8,750 properties changing hands last month, down 67 per cent from the recent peak level of 26,412 sales recorded in September last year, estate agents' commissions have fallen sharply.
'Obviously, many agents are suffering losses,' said Zuo Hei, a director at Homelink.
Kenneth Pak Kei-yuen, a senior general manager at the Beijing office of Midland Realty, said he believed the worst was not yet over.
'It would not surprise to see more closures if the poor market conditions persist,' Pak said, adding that 'tens of thousands' of people could be axed during this crisis.
Midland closed 10 branches because they were losing money and staff were being moved to outlets with better sales, he said. The company now operates 38 outlets.
The slide in sales volume was also triggered by the Beijing municipal government's decision to require non-local residents to prove they had paid taxes in the city for five years before they could buy a home there.
'The rule immediately hit buying demand as non-local residents account for nearly 70 per cent of total transactions in Beijing,' Pak said.
Then last month, the municipal government cut the maximum commission chargeable on the sale of homes in the secondary market to 2 per cent from 2.5 per cent.
Centaline Property Agency also closed 40 branches in Beijing, involving 800 job losses, because of the deteriorating market condition and reduced its network to 160 outlets.
'There are 10 to 20 branches under observation. If they fail to achieve break-even point for the next two months, we will close them too,' said Sherman Lai Ming-kai, the chief executive of Centaline.
Beijing had registered the worst performance of the group's 1,100 outlets in mainland cities.
Lai said smaller operators would suffer most in this changing market.
The amount in yuan that monthly commission revenue at Centaline's Beijing operation fell to, from a previous peak of 80 million yuan