After mushrooming during the prime time of the real estate sector in 2007, many property brokerages in Ho Chi Minh City have since collapsed along with the sluggish market, and have ended up switching to selling everything but realty projects.
At the entrance of the Ng. Phi Hung real estate trading floor on Nguyen Thi Thap Street, District 7, what is noticeable these days is not the number of parked motorbikes as in mid-2009, when the floor was opened, but a stand to sell pho (rice noodle), and a couples of tables and chairs.
At around 9am every day, the former property brokers arrive and begin their jobs as food vendors.
“There are only five of us left,” said Tran Dinh C., a sales executive of the trading floor.
“We have to sell pho to earn a little more profit amid this slumping market.”
In its early days, the Ng. Phi Hung real estate trading floor set an ambitious target of becoming the country’s top contractor, housing trader, and brokerage.
“But now that we have to wait expectantly to earn a single penny from brokerage, how could we think of developing?” an employee of the floor said.
Not far from the “pho trading floor,” at the junction of Nguyen Huy Tho and Nguyen Van Linh streets is a shop selling mattresses, pillows, and quilts. This is the successor of the Gia Phuc Real Estate Co.
“We had to cease operations due to a myriad of market difficulties,” said T., the company’s director, adding that her family has used the space to open the quilt shop.
Stuck with a similar fate is Tuong Nghia, a realty brokerage on District 2’s Tran Nao Street, which used to be a “real-estate market” with dozens of brokerages and is now functioning as a beverage distributor.
N., who works for the company, said at the peak for this 10-year-old brokerage in 2007 there were as many as 100 employees, all of whom have recently been laid off.
“But 98 percent of the realty companies on this street have shut their doors,” said N.
“Most of those remaining open are companies with their own spaces, and thus do not have to pay rent.
“But they still have to do other businesses to earn their daily bread.”
Employers turn into employees
While the brokerages were forced to transform their functions, the owners of the real estate trading floors have themselves had to move their posts.
T., who used to be the head of Tin Thanh trading floor in District 7, had to close his company early this year, and moved to work for another brokerage in Tan Phu District.
“After all, I am following the real estate career, while other floor owners have to change their jobs,” shared T.
Similarly, L, the owner of HL trading floor, also shut down his own facility to work for another company.
However, at the end of last year, L had to leave again since his new destination was also stricken by difficulties.
Meanwhile, a large number of property companies on Cao Thang Street have had to die young after blossoming in 2007.
“Brokerages trying to stay in the market are still operating with difficulty since there is almost no liquidity on the market,” commented Ta Quang Vu, chairman of Dat Ngoc real-estate company.
For his part, Le Hong Phuc, chairman of Nha Viet Co, said it is costly to maintain a realty trading floor.
“Total expenses, including space rental, telephones, and wages, are as much as VND70 million (US$3,360) a month,” elaborated Phuc.
“Since they have no sales and no revenues, real estate brokerages have to shut down, or narrow their operations to secure capital.”
Giants on the verge of collapsing, too
The brokerages are not the only ones suffering from the frozen markets, as even the giant realty companies are sharing the same fate, with their unsettled debts amounting to hundreds of billions of dong at exorbitant interest rates.
Phat Dat Real Estate Co, for instance, only posted a revenue of VND1 billion in the third quarter of 2011, with most of the money coming from parking and house renting activities.
Meanwhile, the company has to pay annual interests worth more than VND100 billion for its long-term loans worth VND584 billion.
Similarly, Quoc Cuong Gia Lai Co said the exorbitant lending interest rate is the main cause for its VND104-billion loss in Q4/2011.
The same culprit is observed from the financial reports of a series of realty companies, including the Ocean Group Corporation, and Song Da Urban & Industrial Zone Investment and Development JSC.
Meanwhile, Song Da-Thang Long Co is facing threats from its loans worth thousands of billions of dong, while the real estate market has yet to show any brighter signs.
Source: Tuoi Tre Online