In a significant revelation, Centaline Property has disclosed that its mainland China unit is grappling with a substantial backlog of unpaid commissions owed by developers. Consequently, the property agency has been unable to compensate its employees for their commissions, a situation compounded by delayed payments from troubled developers like Evergrande.
This announcement by Centaline comes amid a worsening housing market crisis, increased default risks, and a sluggish economy that have collectively contributed to mounting commission arrears for property agents and developers.
The mainland counterpart of Hong Kong’s Centaline Property, namely Centaline Property Agency (Shenzhen), has been unable to recover certain commission fees due to the ongoing debt crisis and liquidity shortages faced by property developers. According to Centaline’s statement released on Friday, the volume of unpaid commissions owed by developers and agents is considerable, thereby preventing Centaline Property from advancing these payments to its workforce.
While the precise figure of unpaid commissions remains undisclosed, the Securities Times state news outlet reported on August 21 that the commission owed to Centaline Property Agency (Shenzhen) has exceeded 1 billion yuan ($137.19 million).
Centaline confirmed that salaries for its Shenzhen unit have been paid up to July and assured that all its units continue to function normally. It asserted its commitment to maintaining its presence in the mainland China market.
To address the issue of overdue payments, Centaline has established a dedicated team responsible for managing these outstanding dues. The company emphasized that it would prioritize settling the due commissions with its employees once the necessary funds are recuperated.
Liu Tianyang, who leads this team, shared insights with the Securities Times, explaining that some developers have employed property offsets to cover commissions. However, this approach has often resulted in revenue loss for the Shenzhen property agency. Liu also acknowledged that the company is currently operating under substantial pressure and warned that compensating employees for their commissions might exacerbate its challenges.
As the housing market situation unfolds and developers grapple with their financial burdens, Centaline’s revelation sheds light on the complex dynamics affecting China’s real estate sector.