HK’s leading property broker Centaline cries foul as Sino Land sets below market commission rate

04-Jan-2019 Intellasia | South China Morning Post | 6:00 AM Print This Post

The ties between Hong Kong’s property developers and sales agents are fraying, as declining prices in a cooling market crimps profit margins, causing the two former partners to turn against each other.

On December 29, Sino Land said it would pay just 1.7 per cent in commission fees for its Grand Central project in Kwun Tong, only after brokers had helped the developer to sell 1,345 flats and rake in HK$16.8 billion (US$2.1 billion), according to Centaline Property Agency, one of the city’s largest with around 5,000 agents.

In a five-page letter to Sino Land chair Robert Ng Chee Siong on Wednesday, Centaline said that the commission rate for the 42 projects it had worked on recently ranged between 2.5 per cent to 5 per cent.

For projects in Grand Central’s vicinity such as One East Coast in Yau Tong, brokers said they had received commissions of between 2.75 per cent to 3 per cent.

Sources close to the developer said the company was paying a low commission rate because of the below average selling price of the project.

Centaline said that they have been in talks with Sino Land’s sales management team headed by associate group director Melvin Yeo and associate director Victor Tin asking them for at least 2.5 per cent, but they have not heard from the company.

Sino Land declined to comment.

Louis Chan, vice-chair for Asia-Pacific at Centaline, said it was unfair on the agents as Sino Land announced the rate only after they had helped the developer to sell more than 1,300 units in four rounds of sales since early December.

“Sino Land’s low transparency policy is hardly acceptable and it is also unfair to my colleagues who worked day and night on the sales,” he said.

“We have about 2,000 agents helping with the sale. Some of them have promised a 2 per cent rebate on the sales price to their clients,” he said, which means that they will have to dig into their own pockets to refund their customers.

“How can I face my colleagues now. We have to speak up for the industry,” Chan said.

Centaline’s subsidiary Ricacorp Properties is also considering sending a complaint letter.

Midland Realty, another major property broker, said it too has complained to Sino Land about the low fees.

Agents said a meeting with Sino Land would be arranged on Thursday afternoon.

The average price for a flat in this project works out to HK$12 million.

Based on the 1.7 per cent commission rate, Sino Land will have to pay the brokers HK$285.6 million, instead of HK$420 million due from the standard rate of 2.5 per cent.

Sammy Po, chief executive of Midland Realty’s residential department, said his agents saw their commission cut by HK$80,000 based on the average selling price of HK$10 million.

Po said that had the developer agreed to the market rate of 2.5 per cent, the commission for every HK$10 million deal would have been HK$250,000 per deal instead of HK$170,000.

Individual agents meanwhile will only get around HK$51,000 for every HK$10 million deal they conclude as they get only 30 per cent of the commission, he said.

“We have been working closely with Sino Land for more than 10 years and have never seen such a thing happen before,” Po said.

Midland said more than 1,000 agents took part in the Grand Central sale and managed to sell 500 units.

“It would have been fine if Sino Land had announced the commission rate of 1.7 per cent for Grand Central before the start of the sale. It would have been up to my colleagues to accept it or not, but not after a month,” Po said.


Category: Hong Kong

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