Home » Business » Real Estate
Property agents forced to shift gears
By Cao Qian |
December 7, 2011, Wednesday
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Print Edition
Print Edition
TONY Li, an agent with Shanghai Centaline Property Consultants Ltd, has spent recent weekends at new residential developments in Pujian, a town in the outlying district of Minhang, asking prospective buyers what they want in a house, handing out business cards and collecting phone numbers from would-be clients.
Li's company, the city's largest real estate chain in terms of transaction value, is acting as sales agent for several projects in the area developed by different builders.
"It's harder and harder to close deals involving existing houses since the central government instituted tough measures this year to rein in property speculation," said Li, an Anhui Province native in his mid-20s who has been working in Shanghai for more than two years as a real estate agent.
"We used to spend most of our time dealing with sales of existing homes but have gradually shifted our focus to the new property market in order to survive these hard times," he added.
Hard times indeed. The property sector has lost its bloom after a series of rigorous government austerity policies that include higher down payments, tighter mortgage-lending criteria and restrictions on how many homes people can buy.
Statistics tell the story. In November, sales of existing properties across Shanghai, mainly residential, fell 14.6 percent from a month earlier to 6,900 units, the fourth consecutive month of decline. The monthly volume was also the lowest since July 2010, according to Century 21 China Real Estate, which has more outlets than any other real estate chain in the city. By contrast, nearly 20,000 existing homes were sold last January, Century 21 data showed.
"Brokering new projects, both commercial and residential, for builders used to account for about 30 percent of our business, but now it has surged to up to 70 percent," said Song Huiyong, research director at Centaline Property. "It seems to be the only option we have at the moment if we want to make ends barely meet."
Prospects don't look good for a quick turnaround. According to Centaline Property, the majority of potential home buyers who can qualify for loans prefer to sit on the sidelines, hoping prices will drop. Existing homeowners have shown some willingness to reduce asking prices by up to 10 percent - or just 5 percent if they're in prime locations.
"Individual homeowners, especially those with houses in rather central areas of the city, are not in a hurry to sell at lower prices, whereas developers are more anxious to move existing stock," said Gong Min, a senior research manager with Centaline Property.
"On the other hand, potential home buyers keep getting signals that the central government will stand fast on its property market clampdown, giving rise to expectations that prices will drop 20 percent or more," Gong said. "Some real estate developers in outlying areas of Shanghai have been willing to slash prices."
In fact, China Overseas Property (Group) Co, Longfor Properties, Greenland Group and China Vanke Co, the nation's largest publicly traded builder, are among the big developers who recently attracted headlines when they announced significant discounts - 20 percent to 30 percent - at some of their projects as they fight against ever-tightening liquidity and slowing sales.
That prompted recent home buyers, who are now sitting on properties worth less than they paid, to protest at developers' offices from Zhoukang in the Pudong New Area to the Jiading and Qingpu districts. The angry homeowners demanded refunds or, in the case of contracts that had not yet closed, cancellations.
"More potential home buyers have chosen to wait and see if prices for existing homes follow the downward trend now seen in outlying areas," said Lu Qilin, research head at Shanghai Deovolente Realty Co, which operates 80 branches in the city. "A tug-of-war between sellers and buyers will continue to affect market prices, and we have to steel ourselves for a long period of unsettled times."
A real estate chain focused mainly on high-end properties, Deovolente is also turning to new property projects to keep itself afloat.
At present, the company is serving as sales agent for up to 70 new projects around the city, of which about 70 percent are residential.
"Brokering new properties for developers has surged to account for more than 60 percent of our total operation, compared with about 30 percent in the first half of this year," said Lu. "That has helped us show some profit, though it's very meager."
While some smaller property agencies have been forced out of business by the downtrend, Deovolente has managed to add about 25 outlets across the city so far this year and said it plans to proceed with plans to expand its network to 100 branches over the next two months.
Shanghai's existing housing index fell for the second month in November, with the majority of homeowners still reluctant to lower asking prices, the Shanghai Existing House Index Office said earlier this month.
The index lost 5 points, or 0.2 percent, to 2,592, after losing 3 points in October, when it registered its first drop since September 2010.
Citywide, discounts of between 5 percent and 10 percent are now starting to appear from a number of homeowners anxious to sell, according to Zhang Shu, an analyst at the index office.
Li's company, the city's largest real estate chain in terms of transaction value, is acting as sales agent for several projects in the area developed by different builders.
"It's harder and harder to close deals involving existing houses since the central government instituted tough measures this year to rein in property speculation," said Li, an Anhui Province native in his mid-20s who has been working in Shanghai for more than two years as a real estate agent.
"We used to spend most of our time dealing with sales of existing homes but have gradually shifted our focus to the new property market in order to survive these hard times," he added.
Hard times indeed. The property sector has lost its bloom after a series of rigorous government austerity policies that include higher down payments, tighter mortgage-lending criteria and restrictions on how many homes people can buy.
Statistics tell the story. In November, sales of existing properties across Shanghai, mainly residential, fell 14.6 percent from a month earlier to 6,900 units, the fourth consecutive month of decline. The monthly volume was also the lowest since July 2010, according to Century 21 China Real Estate, which has more outlets than any other real estate chain in the city. By contrast, nearly 20,000 existing homes were sold last January, Century 21 data showed.
"Brokering new projects, both commercial and residential, for builders used to account for about 30 percent of our business, but now it has surged to up to 70 percent," said Song Huiyong, research director at Centaline Property. "It seems to be the only option we have at the moment if we want to make ends barely meet."
Prospects don't look good for a quick turnaround. According to Centaline Property, the majority of potential home buyers who can qualify for loans prefer to sit on the sidelines, hoping prices will drop. Existing homeowners have shown some willingness to reduce asking prices by up to 10 percent - or just 5 percent if they're in prime locations.
"Individual homeowners, especially those with houses in rather central areas of the city, are not in a hurry to sell at lower prices, whereas developers are more anxious to move existing stock," said Gong Min, a senior research manager with Centaline Property.
"On the other hand, potential home buyers keep getting signals that the central government will stand fast on its property market clampdown, giving rise to expectations that prices will drop 20 percent or more," Gong said. "Some real estate developers in outlying areas of Shanghai have been willing to slash prices."
In fact, China Overseas Property (Group) Co, Longfor Properties, Greenland Group and China Vanke Co, the nation's largest publicly traded builder, are among the big developers who recently attracted headlines when they announced significant discounts - 20 percent to 30 percent - at some of their projects as they fight against ever-tightening liquidity and slowing sales.
That prompted recent home buyers, who are now sitting on properties worth less than they paid, to protest at developers' offices from Zhoukang in the Pudong New Area to the Jiading and Qingpu districts. The angry homeowners demanded refunds or, in the case of contracts that had not yet closed, cancellations.
"More potential home buyers have chosen to wait and see if prices for existing homes follow the downward trend now seen in outlying areas," said Lu Qilin, research head at Shanghai Deovolente Realty Co, which operates 80 branches in the city. "A tug-of-war between sellers and buyers will continue to affect market prices, and we have to steel ourselves for a long period of unsettled times."
A real estate chain focused mainly on high-end properties, Deovolente is also turning to new property projects to keep itself afloat.
At present, the company is serving as sales agent for up to 70 new projects around the city, of which about 70 percent are residential.
"Brokering new properties for developers has surged to account for more than 60 percent of our total operation, compared with about 30 percent in the first half of this year," said Lu. "That has helped us show some profit, though it's very meager."
While some smaller property agencies have been forced out of business by the downtrend, Deovolente has managed to add about 25 outlets across the city so far this year and said it plans to proceed with plans to expand its network to 100 branches over the next two months.
Shanghai's existing housing index fell for the second month in November, with the majority of homeowners still reluctant to lower asking prices, the Shanghai Existing House Index Office said earlier this month.
The index lost 5 points, or 0.2 percent, to 2,592, after losing 3 points in October, when it registered its first drop since September 2010.
Citywide, discounts of between 5 percent and 10 percent are now starting to appear from a number of homeowners anxious to sell, according to Zhang Shu, an analyst at the index office.
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