China real estate agents begin laying off staff as market starts to wobble
Shanghai's top real estate agent has been forced to downsize, hurt in part by a delay in commission payments from property developers in a market facing increasing liquidity pressure and a slowdown in sales.
Hong Kong-based Centaline Property, which has around 470 branches in Shanghai, told Reuters it has imposed a hiring freeze in the commercial capital and has been reviewing leases at some of its branches since the fourth quarter of last year.
"For agents and shops that can't meet quotas, we would let staff go through natural attrition and stop renting," said Clement Luk, Centaline's chief executive of east China.
"April's transactions in Shanghai were around 2pc lower than March; looking at the momentum now, April may not be the bottom yet, May and June could still be on a downtrend."
Another leading agent in Shanghai, Dooioo Real Estate, said it was also cutting staff, although it still planned to increase its number of branches in the city to 250 by the end of the year from 206 now.
Chinese media reported on Monday that the two real estate agents were cutting staff by 5pc to 10 pc, citing internal sources. Dooioo said its staff cuts would be less than that figure, while Centaline only said it was letting staff go.
China's real estate industry is facing mounting pressure as banks make it harder for developers and homebuyers to borrow amid government curbs on speculative investments.
Price corrections are also spreading to top-tier cities, with the problem of excess supply emerging in Beijing and the southern city of Shenzhen, according to China Real Estate Information Corporation (CRIC), a property data provider.
While Shanghai's inventory level remains healthy, its supply of unsold housing as of the end of April climbed 48pc from a year ago, and its area of residential property sold last month dropped 18pc from March and dropped 16pc from a year ago.
Falling property prices and a resulting sharp drop in construction activity threaten what had been one of few bright spots in the world's second-largest economy, which has been showing signs of losing steam.
China's government has spent more than four years trying to tame record home prices on concerns that they were stoking an asset bubble.