Surviving the chill in the real estate sector

By Nie Ligao (Chinadaily.com.cn)
Updated: 2008-10-21 12:29

During the National Day holiday, property transactions hit a record low of 72 percent down year-on-year, in Beijing, which is usually the busiest time for housing sales. This is the worst period so far this year. But for Xiao Yang the worst is still to come.

An estate broker introduces apartments for sales to a potential home buyer at a housing exhibition in Huangshan City, central China's Anhui Province, October 4, 2008. [Xinhua]

As a property agent with one of the top real estate agencies in Beijing, Xiao Yang, who doesn't want to give his real name, joined this sector after graduating from a technical college last year.

"Now I live on the bottom salary of about 700 yuan (about $102) per month compared with the highest level of 3,000 to 4,000 yuan. I have not finished any deals for the past two months and I have no idea if I'm still in this agency by the end of this year," Xiao Yang says.

Liu Feng, a business director with Career International, one of the leading recruitment and consulting companies in China, says property agencies are the worst hit during downward housing sales as most of real estate developers give their apartments to agencies to sell.

It's estimated that almost 800 branches of various property agencies were closed in Beijing, and half of the locations and agents were slashed in Shanghai since the fourth quarter of last year.

But according to Liu, he thinks what's happening is a normal and inevitable adjustment in the market, considering prices were over-inflated in the past two to three years.

"I think it takes about seven to eight years as a cycle in the real estate industry and now it steps into the falling track," he analysed.

Chen Min has another explanation for the housing downturn. The senior manager at a property development company in Beijing says now all the developers in China face a liquidity problem amid the housing sales downturn and so the developers have to suspend some projects that will mean half of the staff involved would be trimmed.

"Obviously, low-level staff and sectors like agencies will face the first round of blows and some higher positions are also on the list of cutbacks," he added.

The statistics provided by Wang Yang, a consultant in charge of recruitment of the property industry at the Career International, also show that the number of executive positions in the real estate sector have fallen 20 to 30 percent in the third quarter compared with the same period of the last year. These companies are shrinking and their employees are cautious about changing their jobs amid the impending recession on the whole real estate industry.

However, Xiao Yang has to prepare for a new job as 30 percent of his colleagues have left for new jobs. Some of them got positions in the home leasing market and some chose to leave Beijing to medium and small cities to escape the concentration of agents and intense competition.

Manager Chen Min and Liu Feng of the Career International think some eligible employees are still needed and the real estate industry still has a bright future.

Chen predicts it will need one or two years for the housing market to come stable and develop again. Recently as many as 18 Chinese cities have announced specific policies to spur the property market and it's said the central government will also issue some policies shortly to activate the sector.

The news sounds good for the real estate sector. But for Xiao Yang maybe it's too long to wait.

"Right now the most important work for me is to make ends meet so I have to list a detailed cost plan for next month,"Xiao Yang said. "I hope I can find another job before I am sacked."