Fears for real estate jobs amid cyclical downturn in China
Departures of some high-profile senior executives suggest Chinese developers may be forced to cut headcount due to cyclical downturn
The departure of some of the real estate industry's most prominent senior executives in China has deepened concerns as the cyclical downturn unfolds, despite signs of recent market recovery in top-tier cities under strong policy support.
Mainland Chinese media reported last week that Cai Xuemei, vice-president in charge of marketing and sales at Shimao Property Holdings, has resigned and will formally leave the mid-cap developer she has served since 2011. She is the latest in a slew of high-profile departures since the once-sizzling real estate industry slid into a downturn last February. The markets in Shenzhen, Beijing and Shanghai are recovering now after the central government cut taxes and interest rates and pumped trillions of yuan of liquidity into the economy.
But the widespread worry is that an unprecedented glut in the housing sector, which absorbs 15 per cent of China's urban jobs, will take about five years to clear and force developers to cut down their headcounts, especially in construction, marketing and sales departments.
"Traditional project managers are no longer in need," said Beijing-based head hunter Carrie Ren, who specialises in the real estate industry. "Developers are trying to recruit senior managers who have financial background or have experience in the internet world."
Funding is the lifeline for developers while the internet is rapidly becoming a platform to market their projects and even provides a future for their restructuring into new businesses.
Cai has more than doubled Shimao's annual contracted sales revenues to more than 70 billion yuan during her stay. However, as growth in the industry is now expected to slow down after breakneck expansion in the past decade, almost all Chinese developers, including her company, are cutting back on construction this year and many have lowered their sales target to single-digit increases from previous years' annual goal of 20 to 30 per cent.
Such trends have become a hot talking point in industry gatherings after Mao Daqing, a former senior vice-president of China Vanke, left the country's biggest homebuilder in March to start his own venture. Xiao Li, another former senior vice-president, also left towards the end of last year to join a property internet start-up.
"Vanke will face some challenges in nurturing a new generation of leaders," said Carol Wu, the head of research at DBS Vickers (Hong Kong). "But their chief executive Yu Liang is still there."
These departures are stoking speculation that more prominent real estate professionals will seek better opportunities elsewhere or pursue dreams of opening their own companies to embrace an internet boom strongly encouraged by the Chinese government.
Still, the real estate industry remains a crucial driver of the broader economy and a major employer, which means policymakers will roll out measures to boost the sector when needed. That makes it still attractive to those outside.
A survey last month by Chinese career platform Zhaopin. com showed a rising number of civil servants are leaving their jobs, 34 per cent more this spring than for the same period last year, and the real estate, financial and internet industries are their favoured targets.