Realty firms resort to massive layoffs as market dries up

The number of employees, mostly in the sales, after-sales, marketing, and legal departments, leaving the market in the last two quarters of the year is estimated in the thousands.

Some small and medium-sized firms with less than 50 employees have terminated the contracts of 70% of them due to lack of funds.

Property developers who have sales and brokerage staff have laid off 20-25% of them besides cutting the salaries of those who remain.

The head of a listed property developer with a sales department said as of mid-December the company had sacked 50% of its staff and would have to lay off more people if the difficulties persist.

Besides, it has cut salaries by 25-40% at the management level and 10% or less at lower levels, he said. The layoffs, the worst since 2013, were caused by the market shrinking for three consecutive quarters.

In the second half of the year the number of transactions fell to a record low after the market was hit by banks’ credit tightening, rising interest rates and decreasing confidence among buyers, he said. "The real estate market bottomed in 2013-14 period, gained momentum in 2015, and boomed in 2016-18, attracting a lot of employees from the banking, finance, marketing, and insurance industries."

A recent survey of some 500 brokerages by real estate website Batdongsan published in December shows that the number of workers in real estate trading floors decreased by 61% in the fourth quarter.

Pham Lam, vice chairman of the Vietnam Association of Realtors, said HCMC has more than 100,000 realtors, including 20,000-30,000 working for professional organizations. Some 50% lost their jobs as of December, he added.

Nguyen Loc Hanh, CEO of the Asia Gem Real Estate Investment Joint Stock Company, said the wave of layoffs shows that real estate businesses lack depth and long-term strategies, and lack the resources to endure downturns for more than 24 months.

Forecasting more pain in the first two or three quarters of next year, he said they should brace for at least six months of losses and no cash flows.

Brokers should prepare for having their incomes fall by 50% or even completely dry up in the first half of 2023, and the slump would last until the third quarter of 2023 at least, he said. "The speed of recovery will be very slow because the market has lost too much strength and faith."