© Reuters. FILE PHOTO: A sign of Centaline Property is pictured at the company’s office in Tianjin, China August 18, 2023. REUTERS/Tingshu Wang
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BEIJING (Reuters) – Centaline Property has said its mainland China unit is owed a huge amount of unpaid commissions and so it cannot pay employees their commissions, responding to reports of delayed payments to the unit by developers including the embattled Evergrande.
Centaline’s statement comes as a deepening housing market crisis, rising risk of default and a faltering economy are dragging property developers and agents into commission arrears.
The Hong Kong property agency’s mainland arm, Centaline Property Agency (Shenzhen), has not recovered some commission fees as property developers grapple with the debt crisis and liquidity crunch, Centaline said in a statement on Friday.
“The current amount of unpaid commissions from developers and agents is huge and Centaline Property is not in a position to advance them to its employees,” the company said.
It did not give a figure for the unpaid commissions but the Securities Times state news outlet reported on Aug. 21 that commission owed to the Shenzhen subsidiary had reached more than 1 billion yuan ($137.19 million).
The Shenzhen unit has paid fixed salaries up to July, Centaline said, adding that all of units were operating normally and it would not withdraw from the mainland China market.
Centaline said it had set up a team to handle overdue payments and it would prioritise the settlement of corresponding commissions with employees once funds are recovered.
Liu Tianyang, who is leading the team, earlier told the Securities Times that some developers had used housing to offset commissions, but that often resulted in a loss of revenue for the Shenzhen property agency.
He said the company was operating under major pressure and the payment of commissions due to employees would lead to more difficulties for it.
($1 = 7.2890 Chinese yuan renminbi)