Austere Tet for real estate brokers as bonuses plummet

Nang, a real estate broker in Ho Chi Minh City, said salaries and bonuses at his company were the lowest point in the past half-a-decade since he entered the industry, so he and his family are embracing austerity for this Lunar New Year.

Tet, Vietnam’s biggest and most important festival, is being celebrated during a week-long (January 23-29) national holiday.

Nang’s company, based in HCMC’s District 3, recorded poor results in 2019, especially during the year-end peak sales season, compared to previous years. Throughout 2019, the company did not have any new housing projects to sell because regulatory issues prevented them from being approved, Nang said.

Completion of housing projects sold before 2019 have also been delayed a lot because of inspections by authorities that have had buyers in an uproar, and many of them have demanded their money back with interest.

With no new projects to sell, Nang said he makes virtually no commission and has been taking home just his basic monthly salary of VND6 million ($258) for several months now.

To supplement his income, Nang has worked more jobs, including selling townhouses and land lots in outskirts areas of HCMC. However, in 2019, even selling land in these areas became difficult because buyers became distrustful after a major fraud  by real estate developer Alibaba Company was discovered by the police in September.

The HCMC police found that the company had bought 600 hectares of agricultural land and sold plots in it claiming it was urban housing land, though authorities had not approved the conversion.

The fraudulent practice is colloquially known as "ghost" projects, which usually lack construction licenses, or fail to complete construction, but are sold while still in the planning phase.

Even selling townhouses has not been very profitable, because Nang has to cooperate with other brokers in each locality. After every sale, brokerage fees have to be split, and in some transactions, he has not been able to cover his expenses, Nang said.

This Tet, the only income Nang received was a bonus equal to one month’s salary, and some lucky money, a Vietnamese Tet tradition, from his boss. This amounted to a little more than VND8 million ($344), around 10 percent of what he received in 2017, when he got VND80 million ($3,441), and 20 percent compared to 2018, he said.

"I’m not sure whether I can survive in this sector next year with forecasting continued difficulties for the market in 2020,"  he added.

It has also been a gloomy Tet for Hao, an employee of a real estate brokerage in HCMC’s Phu Nhuan District. For several months in mid-2019, the company was not able to pay salaries, or paid just 50 percent to employees because there was little business happening.

By the end of the fourth quarter, executives even had to borrow money to pay salaries and Tet bonuses to employees, Hao said.

"My Tet bonus this year is around half a month’s salary, the lowest level since 2015. I’ll have to suffer a poor New Year and hope the market recovers in 2020," Hao said.

All-round gloom

The CEO of a real estate consultantancy in HCMC’s Binh Chanh District, who did not wish to be named, said most real estate employees in 2020 took home the worst Tet bonuses in the past five years, with only around 20 percent of brokers in HCMC reporting positive business results.

According to a survey conducted by real estate investment firm Viet An Hoa JSC, around 3,000 to 4,000 real estate agents in HCMC, or 7 percent of the city’s real estate workforce, quit their jobs between January and November due to dwindling new housing supply.

Another 6,000 agents are estimated to have taken on additional jobs in order to cover living expenses. These people maintain their status as agents of real estate firms, but because their incomes have decreased significantly, they’ve had to take on more jobs, the survey report said.

The Ho Chi Minh City Real Estate Association's (HoREA) latest report said that the number of completed units in the first nine months of 2019 fell 53 percent year-on-year to 12,453, while only 12 projects were approved, a 72 percent decline.

Many housing projects were seeing continuous delays due to lengthy legal procedures or stalled because of inspection problems, preventing new supply from entering the market. If these regulatory bottlenecks are not resolved, supply shortage could continue in 2020, said Huynh Phuoc Nghia, deputy head of International Business and Marketing at the HCMC University of Economics.