Hong Kong property

Sino Land agrees to revise property agents fees to 2 per cent from January 1 at Grand Central

  • Sino Land says it will pay 1.7 per cent in fees for Grand Central flats sold last year instead of the standard 2.5 per cent
  • In a late concession, the developer says it will pay 2 per cent in fees for flats sold from January 1
PUBLISHED : Thursday, 03 January, 2019, 12:24pm
UPDATED : Friday, 04 January, 2019, 12:15am

Sino Land said late Thursday that it would revise commission fees at its Grand Central project in Kwun Tong to 2 per cent starting from January, offering a partial concession to property agents angered by the developer’s decision to slash the fee last week.

Management from Centaline Property Agency held talks on resolving the issue with their counterparts at Sino Land on Thursday afternoon, amid growing resentment among agents towards the developer’s unilateral move to lower commissions below the standard rate.

On Saturday, Sino Land said it would pay just 1.7 per cent in commission fees at Grand Central, after brokers had helped the developer sell 1,345 flats and rake in HK$16.8 billion last year, according to Centaline, one of the city’s largest property agencies with about 5,000 agents.

Sino Land’s concession on Thursday night will apply to sales at the project starting this year, ahead of another round of sales set for Saturday.

The company said it will raise the rate to 2 per cent once agents sell more than 40 flats at Grand Central starting from January 1. It will release 195 units on Saturday.

“We welcome the arrangement,” said Sammy Po, chief executive of Midland Realty’s residential department, after also complaining to Sino Land about the earlier fee reductions.

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“We have been working closely with Sino Land for more than 10 years and have never seen such a thing happen before,” Po said.

In a five-page letter to Sino Land chairman Robert Ng Chee Siong on Wednesday, Centaline said that the commission rates for the 42 projects it had worked on recently ranged between 2.5 per cent to 5 per cent.

For projects in Grand Central’s vicinity, such as One East Coast in Yau Tong, brokers said they had received commissions of between 2.75 per cent to 3 per cent.

Centaline management said it would hold talks in hopes of ­resolving the issue with Sino Land Thursday.

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Before the meeting, sources close to the developer said the firm was paying a low commission rate because of the below-average selling price of the project.

Centaline said in a letter that they had been in talks with Sino Land’s sales management team, headed by associate group director Melvin Yeo and associate director Victor Tin, asking them for at least a 2.5 per cent rate, but at the time they had not heard from the ­company.

Sino Land declined to comment.

Louis Chan, vice-chairman for Asia-Pacific at Centaline, said the move was unfair to the agents, as Sino Land announced the rate only after they had helped the developer sell more than 1,300 units in four rounds since early December. “Sino Land’s low transparency policy is hardly acceptable, and it is also unfair to my colleagues who worked day and night on the sales,” he said.

“We have about 2,000 agents helping with the sale. Some of them have promised a 2 per cent rebate on the sales price to their clients,” Chan said, which means that they will have to dig into their own pockets to refund their customers.

“How can I face my colleagues now? We have to speak up for the industry.”

Centaline’s subsidiary Ricacorp Properties was also considering sending a complaint letter.

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The average price for a flat in the project works out to HK$12 million.

Based on the 1.7 per cent commission rate, Sino Land would have to pay the brokers HK$285.6 million, instead of HK$420 million due from the standard rate of 2.5 per cent.

Sammy Po, chief executive of Midland Realty’s residential department, said his agents would have seen their commission cut by HK$80,000 based on the average selling price of HK$10 million.

Po said that had the developer agreed to the market rate of 2.5 per cent, the commission for every HK$10 million deal would have been HK$250,000 per deal.

Under 1.7 per cent commission, individual agents would only get around HK$51,000 for every HK$10 million deal they conclude as they get only 30 per cent of the gross commission, he said.

Under the 2 per cent commission that applies from January 1, individual agents would get around HK$60,000 for a similar deal.

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Midland said more than 1,000 agents took part in the Grand Central sale and managed to sell 500 units.

“It would have been fine if Sino Land had announced the commission rate of 1.7 per cent for Grand Central before the start of the sale. It would have been up to my colleagues to accept it or not, but not after a month,” Po said.