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Real estate firm’s offices smashed after closures

Customers and staff lash out; company blames China govt policies for its woes

BEIJING – EMPLOYEES and customers of a leading real estate company have smashed its offices after the closure of some 1,000 of its branches across China.

Chuanghui said it had closed more than half of its 1,800 outlets since October.

A company official blamed the company’s woes, including an 80 per cent drop in its Shanghai business, on government policies to cool the real estate sector and rein in credit growth.

‘The market has taken a turn for the worse and our deals have dropped a lot,’ Mr Zhang Min, Chuanghui’s corporate planning director, told the media from the company’s headquarters in Shenzhen.

A second official, quoted in the local media, said Chuanghui’s problems stemmed from a costly expansion in Shanghai.

There was no word on how the company will compensate affected employees and customers.

New rules preventing people from obtaining mortgages on second homes, coupled with a government freeze on new bank lending at the end of 2007, have begun to hit China’s real estate market.

Prices fell 20 per cent in December alone in both Beijing and Guangzhou, the state media reported, without specifying whether they were referring to new or existing homes.

The authorities have previously sounded the alarm about surging prices, asking developers to build more affordable housing.

‘The government is obviously keenly aware that most people’s big investments are in residential property, so they’re very sensitive to it and don’t want big price moves,’ said Mr Michael Hart, managing director of property services firm Jones Lang LaSalle in Tianjin.

‘There is no good way to have a perfect balance, so that’s the government’s challenge,’ Mr Hart said.

All of Chuanghui’s offices in four Pearl River Delta cities, including Guangzhou, were closed on Tuesday, while dozens more in Shenzhen and two other southern cities were also shut, local media said. The company has announced plans to withdraw from Shanghai on Jan 11.

Mr Zhang added that Chuanghui’s cuts would help it stay afloat. But speculation that Chuanghui could face bankruptcy has panicked its employees and customers.

One photo on a newspaper website showed people standing in front of locked doors with a sign reading: ‘Chuanghui, give us back our hard- earned money.’

The People’s Daily reported in its online version that some of Chuanghui’s offices in southern Guangdong province were smashed. Computers and printers were missing from the offices, said other reports.

A teacher with the surname Liang said she had paid Chuanghui more than 10,000 yuan (S$2,000) for an apartment, but had not got her title deed.

An employee, identified by his surname Wang, returned to his former office to collect pay arrears only to find it empty.

 

Source: REUTERS (The Straits Times 17 Jan 08)

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