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.Source: Arabian Business