Beijing property curbs hit estate agents
Beijing property curbs hit estate agentsBy Tom Mitchell in Hong Kong
Thursday, January 17, 2008
One of China's largest real estate agencies has closed almost half its 1,800 outlets and shed thousands of employees, blaming its woes in part on government measures to curb the sector.
News of the closures and dismissals at Shenzhen-based Chuanghui Real Estate came as China's central bank announced it would raise banks' reserve requirement by 50 basis points. From January 25, banks will have to keep 15 per cent of their deposits with the central bank, which has been on a tightening campaign as part of efforts to rein in inflation and an overheated property market. Yesterday's move will be the first rise this year but follows 10 increases in 2007.
Lin Fenghui, Chuanghui's chairman, appealed for calm after the closures sparked chaotic scenes at its offices across southern and eastern China. “We have had some cash flow problems,” he said in an interview on Chinese website Sohu.com.
In the interview, Mr Lin admittedChuanghui's problems arose in part from him being “over-optimistic about the business” and said that it had expanded too quickly.
Zhang Min, a Chuanghui spokesman, confirmed that the company had closed 800 outlets since November and shed almost two-thirds of its 20,000 agents, with surviving employees paid only on commission. Chuanghui has also closed 150 of its 200 outlets in Shanghai after aggressive local government measures to cool the property market.
The drama highlights the difficulties the Chinese government faces as it tries to rein in inflation, which is now running at 11-year highs, having touched 6.9 per cent in November on the back of soaring food prices.
Beijing must also strike a delicate balance in the property sector. While rising prices have enriched homeowners and realtors, they have embittered those who cannot afford a home or have been evicted from old neighbourhoods to make way for new developments.
it is definitly a good news to the lower walks in china today. how badly i wanna buy a house.
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