The mainland's booming real estate market but insufficient brokerage services have attracted Taiwan's largest realtor.

Sinyi Realty Estate Inc, Taiwan's only listed realtor, plans to open 1,500 offices on the mainland in the coming eight years. Currently, it has 55 offices in Shanghai and Zhejiang Province.

"By 2006, we plan to have 250 outlets, either in the form of direct branches or franchises, on the mainland," said Chou Chun-Chi, chairman of Sinyi Realty Estate Inc.

Turnover will also soar accordingly. Although Chou said it was too early to estimate the exact figure, he believed the revenue from the mainland market would shortly surpass that of Taiwan. Last year, the mainland market only contributed about 10 per cent to its total revenue.

Sinyi came to Shanghai 11 years ago and has taken a prudent approach. In terms of the number of its outlets, it doesn't seem to enjoy a favorable market position, but its business volume is one of the highest among all players in Shanghai.

"We always hold a very positive view on the mainland's real estate market," Chou said. "What we do is to try to bring in a reasonable and sustainable operating mechanism into the new market and establish a good base before further expansion."

In 1999, Sinyi formed a partnership with US realtor Coldwell Banker (CB). The US company authorized Sinyi as its legal representative for the Greater China market.

After establishing a base in Shanghai, Sinyi decided to use it as its mainland headquarters and expand to other parts of the country.

As Shanghai is located on the east coast and the estuary of the Yangtze River, CB Sinyi plans to expand to the coastal area and along the Yangtze River, with Guangzhou, Shenzhen and Wuhan as its priorities. In northern China, Beijing and Tianjin are two of CB Sinyi's two strategic markets.

Looking inland, big cities such as Chengdu in Sichuan Province are also key markets.

China's rapid economic development has created affluent upper and middle classes. They buy homes not only to live in, but also for investment, which creates a large market for second house trading.

However, market statistics indicate that only about 15 per cent of Chinese buyers use a broker, compared with about 90 per cent in the United States. One of the obstacles is the accountability of realtors and the services they can offer.

In cities such as Shanghai or Hangzhou, real estate agents operating from stores sprout like weeds on streets. It is even said there are more real estate agent outlets than rice stores in Shanghai, where the number of realtors exceeds 10,000.

What troubles brokers such as Sinyi, which has sound, long-term experience in the market, are the irregularities of local players.

In Beijing, another booming city for real estate, there are about 4,000 agent companies, while only 1,000 are approved by the government.

Meng Xiaosu, chairman of China's largest property developer China Real Estate Development Group Corporation, said that property brokerage in China is far behind real estate development, which is the weakest part of the real estate business chain.

"There is a severe shortage of intermediate services, such as realtor and financial services, especially in Beijing," he said.

Some realtors work as "housing bankers," which means they engage in housing trading, making money from price differences, instead of getting commission from the two sides.

Scandals have occurred in both cities after brokers disappeared with money from clients and banks.

"The image of the industry has been harmed by such irregularities," said Eric Feng, general manager of CB Sinyi's Beijing operation.

"If you go to the street and ask anyone, 'What do property agents do?' They would probably say, 'Oh, they are cheaters,'" he said.

Despite that, Sinyi opened its first outlet, also its flagship store in Beijing earlier this month.

"Scandals show that the market needs decent agents, which will open a huge market for us," Feng said.

(China Daily May 24, 2004)