Brokers out of commission as developers delay payments

A HomeLink property brokerage in Beijing. Floor area sold in May dropped 10.8 percent from a year earlier, while contracted sales value decreased 11.3 percent. [Photo/China Daily]

Cash-strapped property developers grappling with a deepening slump in the nation's housing market are delaying huge amounts of fees due to real estate brokers.

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Li Yaozhi, general manager for South China with Centaline Property Agency Ltd, one of the biggest brokerages in China, told reporters last week in Shenzhen that developers owe Centaline more than HK$3 billion ($387million) in commissions.

In Shanghai, a Centaline employee posted a picture on the Weibo micro-blogging service that showed several Centaline employees staging a protest demanding commission payments from a developer named Changtai.

A sales director with one of the biggest real estate agencies in Shanghai, who declined to be identified due to corporate policy, told China Daily on Wednesday that nearly all brokerages in the city have com-missions due from developers, with the proportion in some cases reaching up to 70 percent. "It's been an established industry practice here that brokerages will advance the commissions to sales agents first before the developers make the payment.

"But this year, the length of the delays and the amounts due have gotten to the point where it starts affecting the brokerages' own financial health," the source said.

Official data published on Wednesday showed that China's average home prices fell for the first time in two years in May.

The National Bureau of Statistics said that home prices dropped 0.2 percent in May from April, with 35 of the 70 cities polled recording a decline, up from eight cities in April.

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