Cash-strapped mainland developers delaying commissions to property agents

Mainland property agents are reeling from a double whammy, as cash-strapped developers fail to pay them commissions for marketing and ancillary services at the same time as revenues plunge amid an extended slowdown in sales.

Leading real estate firms Hopefluent Group Holdings and DTZ said the credit squeeze in the mainland housing market was exacting a heavy toll on their operations. Centaline China said earlier developers owed it more than 1 billion yuan (HK$1.24 billion) in unpaid commissions.

"A third of all developers that we're helping sell projects have not paid us commission fees according to the payment schedule," said Fu Wai-chung, a director at Hopefluent.

The firm, which operates 280 branches across the mainland, was marketing about 600 to 700 property projects, Fu said.

"Developers are deferring their payment from 90 to 120 days as credit tightening and a decline in property sales hurt their cash flow," he said.

Fu said developers in third and fourth-tier cities were suffering the most as sales fell sharply and banks slowed the granting of mortgage loans.