S&K Estate Agents files for bankruptcy at a loss of 80 jobs
Dubai-based real estate agency S&K Estate Agents said a deteriorating property market in the emirate contributed to its decision to file for bankruptcy and be liquidated.
"Simply put, the revenue being generated by the business drastically reduced over the first half of 2015, without enough income to cover operational costs," S&K said in an emailed statement released through a public relations firm.
The company said its reputation had suffered from client complaints and a recruitment drive did not yield results quickly enough to save the business.
"Current Dubai market factors didn't help, as 2015 property transactions, both in number and value, have plunged," said S&K, which had about 80 employees and an office in Los Angeles as well as Dubai.
"This situation was exacerbated by increased advertising prices from property portals and recurring internal issues faced with agents under the employment of S&K Estate Agents LLC. These factors, combined with the increased costs of licensing and visas, made the situation untenable."
The company added, "After years of profitability, we believe the brokerage market is saturated - too many agencies without the population and investment to match.
"Also, many smaller competitors dropping fees to 1 percent per transaction to win the business has made it increasingly difficult for larger brokerages to compete."
After booming for the last few years in a strong recovery from its crash during the global financial crisis, Dubai's residential property market has lost steam this year, partly because of new supply.
Residential rents dropped 3 percent quarter-on-quarter during the second quarter of 2015 while capital values for completed apartment units fell 3.5 percent, according to a report this week by Abu Dhabi Islamic Bank and MPM Properties.For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
many more to follow. watch this space.
I strongly feel that the municipality fees compounded with the higher than usual utilities fees has made it illogical for anyone to even think of buying a house over 3 bedrooms. Then you have the investors that increase the prices to illogical levels to make a quick profit and there appears to be no controls. Who would pay 14 million for an apartment in downtown Dubai? Get rid of some of the third-world players by increasing incentives for end-users to access real estate properties, for example, they can't flip a property after 2 years time frame or even occupy the property. And Dubai to drop the municipality fees, they can acquire taxation in other ways. I would also like a rule that a developer can't sell properties until after they are completed.
and yet, if statistics are to be believed, sales are booming and there is only a marginal percentage reduction in sales.
Khalid I agree with your prediction. The S & K bankruptcy filing is just a reflection of real estate market conditions with inbound investment falling, simply too much stock floating around the market and unlikely to improve any time soon.
According to all the noises coming out of the property brokerage segment this just the tip of the failure iceberg. The bigger the name the bigger the overhead against a backdrop of plunging commissions, sadly not a recipe for success!
China's economy slowing down, Russia keeping a tight lid on the treasury and tightening tax breaks in India, plus low oil prices and dangerous times in the general region.
property market corrections are normal , it clears out the punters and allows real home owners some space .. i dont think its a big worry for home owners rather a problem for leveraged traders
The market correction will make the developers target salaried class people to buy properties and not wholly depend on investors. Like any mature market end users will ensure market stability.
I am a retired real estate broker, working at least thirty years in this field. All my family and ancestors being Master Builders so it's in the blood. As soon as properties where on the open market for Sale every opportunist saw the opening to make a fast buck, and that they did.
Every country in the world it is the vendor what should pay the commissions, Rewa are doing a wonderful job, but still a long way to go in my opinion. ........Also across the board I think every one living and spending their money in the UAE should have an opportunity to buy their own property, but priced in the real world.33
One very strong measure to clean up the Realtor industry is to make it law that a Seller can NOT lodge their properties with more than Two Agency's. That way, Sellers will become very particular with whom their property sits with and the Agency can then spend the time it takes to bring in real Buyers.
Buyers would also look for Agencys with the best and most appropriate properties and before long, Company reputations would be built on standards and customer service...and not on current underhand industry methods.
This all takes real investment and time...but...without real determination from the likes of RERA etc this will not happen.
Agents should be on liveable basic salaries (10k+) and have proper bonus structures...and once they have built a sound clientbase they should have the option to move into a commission only structure to be better rewarded. The way it currently works, its dog eat dog with zero rules.
The industry is only as good as the people who are in it.
Real estate Agents have to paint a rosy picture no matter what. They do not live in a real world. However sooner or later reality sinks in with over supply of flats. The current economic conditions have not been helpful either. Cost of living is going up without commensurate increase in salaries of employees.