Falling sales and tumbling prices have forced many real estate companies in major Chinese cities to cut jobs, slash salaries and trim commissions.
Some property developers are known to have laid off as many as half of their staff in the past several months.
"The cost of human resources accounts for a big share of the cash flow though it occupies a very small share in the real estate developing cost," said Li Wenjie, a managing director from Centaline Property Agency Ltd. "Since projects do not sell well in current market, it is hard to maintain a liquid cash flow, forcing developers to cut salary expenses, he said.
Zhujiang Real Estate Company in Guangzhou is reported to have retrenched nearly 40 percent of its total staff, while cutting the salaries of the remaining ones by up to 30 percent.
"In the past, we were used to fat year-end bonuses and other rewards," said a salesperson with a Bejing-based high-end property developer. "This year, we are worrying about our jobs."
Despite reassurances from top management, the staff morale at Vantone, a leading Chinese property developer, has been depressed by the layoffs in units involved in different development projects. "We aren't sure how many (people) have gone," a source in the company said. "I don't know when it will be me."
According to the National Bureau of Statistics, real estate investment growth slowed to 22.7 percent in the first 11 months of 2008, down from 31.8 percent in a year earlier period.
The China Real Estate Index Academy forecasts that the real estate investment growth will slow further in 2009. It said that many large real-estate companies have remained confident in the long term. But short-term uncertainties have forced many to trim their investment plans.
(China Daily January 9, 2009)
