Midland Realty (Holdings) expects to make a smaller provision against bad and doubtful debt this financial year due to an expected decline in forfeitures of second homes.
After the company's annual general meeting, financial controller Lam Fung-fong said as property prices fell steeply in the second half of last year, a number of buyers chose to forfeit down payments, not to complete the purchase, or had difficulty paying commissions.
This combination of factors led Midland Realty to take a $119 million provision for bad and doubtful debts last year.
Ms Lam said this year's provision would be smaller as most of the company's clients who bought flats this year were end-users, meaning the chance of a default was reduced.
Chairman Freddie Wong Kin-yip said income had to be considered in the context of the property downturn because commission revenues came partly from helping developers sell units in the primary market.
Average commission would be about 1.5 to 2 per cent of each purchase, he said.
