moving again?

Our lease is expiring, so we felt we wanted to move to a new apartment near Kristine's new but temporary school campus. Rental market has been coming down, rather noticably, round about 10%. Rushing around Fu Li Cheng the week after our return from Tokyo with several rental agents, mixed gender, all young and mostly new. Saw more than 10 units of sizes between 130-170sqm. Asking prices from 6500-8500. Eventually, we decided NOT to move.

This area called Fu Li Cheng has roughly 5000 units of apartments, close to CBD. Serving this enclave are 30 real estate offices, each engaging around 15 agents. They cover both rental and sales. Each month roughly 30 units are sold, so on average each agent gets to close a deal once a year. Rental is roughly 10 times the sales turnover. That averages out to 1 rental deal per month per agent. On average of Y8500 per unit, and their average commission of 10%, that equates to Y850, plus their monthly base salary of Y800, or Y1650 income per month.

So how do they survive? They dont. Most are nomads who migrate in and out with the flow. Another source of income for them is 'private deal', closing rental or sales transactions without going through their real estate companies. They tend to be aggressive in closing deals, often not taking the deals through their companies, enabling them to offer deep commision discounts to the landlords so they could satisfy tenants rental demand. Therefore, we often see these agents milling OUTSIDE their offices to hijack customers (0nce they engage a customer, their colleagues cannot poach)

Beijing properties are going through the roofs again, but rentals are down some 10%. Somehow they dont reconcile.

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