China Evergrande asks Hong Kong property agents to sell more flats at Emerald Bay if they want the commission it already owes them
- The debt-stricken developer is offering to pay the outstanding fees on two flats for every additional unit that agents sell at the Tuen Mun project, according to notes from a meeting seen by the Post
- The unusual proposal has gone down like a lead balloon with property sales firms, with two of the city’s biggest agencies rejecting it out of hand
The Shenzhen-based developer is offering to pay the outstanding commission fees owed on two flats for every additional unit of similar value that agents manage to shift at its Emerald Bay project in Tuen Mun, according to notes from a meeting seen by the South China Morning Post.
The unusual proposal has gone down like a lead balloon with property sales firms, with two of the city’s biggest agencies rejecting it out of hand.
Evergrande has been holding a series of separate, casual meetings with different agencies, according to a source who attended one of them but did not wish to be identified.
The unprecedented commission plan from the world’s most indebted developer for Hong Kong’s property agencies comes as it struggles to repay outstanding sales commission for its Emerald Bay project. The offer extends to the first 30 units sold in November at the development.
The move comes after property agents filed lawsuits to pursue their sales commissions at Emerald Bay.
Evergrande will pay outstanding commission fees for two units within 48 to 72 hours of a new sale being agreed, the developer said. Sales agents who reject the offer may have to wait to be paid until April 2022, when a fund matures, though commission payments will be placed at the back of the queue after “debt collection procedures”, the developer said. It said it cannot guarantee the commission owed can be collected at that time.
Evergrande is saddled with 1.97 trillion yuan (US$308.5 billion) of liabilities, and is teetering on the brink of collapse. Its struggles have spread to the wider mainland Chinese market, and Hong Kong’s property agents.
Midland Realty and Hong Kong Property Services last month sued Twin City Holdings, the vendor for The Vertex in Cheung Sha Wan, and Fortune Choice Development, the vendor for Emerald Bay, to try and recover about HK$47 million in outstanding commission and other fees.
They recently halted the legal proceedings relating to The Vertex development after its new owner pledged that it would pay up.
Both vendors were also sued by Centaline Property Agency last month for about HK$106 million in commission and others fees. Centaline also later withdrew the proceedings relating to The Vertex.
Centaline would not accept Evergrande’s proposal, said Shih Wing-ching, its founder.
“The money that it owes me should always be paid. It cannot propose any new conditions to make me help it sell one extra unit for repaying,” said Shih. “It has to pay me even if I do not help it sell new units. How can it suddenly add new terms? It thinks we are fools. Why should we be taken as fools by it?”
Shih said that even if he accepts the proposal, but the new units are expensive and market sentiment is not good, then he could still end up not being paid.
“Our staff has to make a living,” he said. “How would I have the face to ask my staff to work [under this condition]? The previous work of my staff has not been paid.”
Hong Kong Property Services (Agency) also would not consider the proposal at this stage, said Dave Ma, its chief operations officer and director for Kowloon.
“Honestly, that’s what it owes us. [The staff] are miserable and worried,” said Ma.
