Real estate industry in difficult times: Some big companies cut nearly 4,500 employees

The wave of real estate layoffs continues.

The Ministry of Construction has just released a report on housing and real estate market information in the fourth quarter of 2023 and the whole year of 2023. Accordingly, real estate businesses still faced many difficulties in the past year.

The report cited data from the Ministry of Planning and Investment showing that the number of newly established enterprises operating in the real estate sector was only 4,725, down 45.01% compared to 2022. The number of enterprises dissolved or temporarily suspended business was 1,286 (up 7.7%) and 3,705 (up 47.4%) respectively compared to the previous year.

The Ministry of Construction pointed out a number of difficulties and challenges that real estate businesses still face, such as difficulties and legal problems with projects. In addition, the coordination mechanism between departments, branches, sectors and localities is not timely and synchronous, which has also caused many difficulties and problems for real estate projects.

Especially in the past year, businesses have had difficulty accessing credit loans. Units have been unable to mobilize corporate bond capital and other capital, leading to a lack of capital to implement projects (having to delay progress, stop implementation). Difficulties in liquidity and cash flow, especially in the context of pressure to mature and repay corporate bonds in the last months of 2023.

In the face of prolonged difficulties, many real estate businesses are forced to cut staff to reduce costs. The Ministry of Construction said that the situation of cutting staff at businesses is still happening not only for small units but also for large real estate companies in the market.

Figures from the consolidated financial statements of real estate companies listed on the stock exchange also clearly illustrate this issue. As of September 30, 2023, many real estate giants have reduced thousands of employees.

For example, Vinhomes Joint Stock Company (stock code: VHM) reduced 1,860 employees compared to the same period in 2022. No Va Real Estate Group Joint Stock Company (Novaland - stock code: NVL) reduced 749 employees after 1 year. Novaland's number of employees is even the lowest in 7 years.

In particular, there is the case of Dat Xanh Group Joint Stock Company (stock code: DXG) reducing 4,480 employees compared to September 30, 2022.

Some other companies have less severe situations, such as Nam Long Investment Joint Stock Company (stock code: NLG) reducing 10 employees, Khang Dien Housing Investment and Trading Joint Stock Company (stock code: KDH) reducing 45 employees.

Work hard to survive

Figures released by the Vietnam Association of Realtors in December 2023 showed that up to 70% of real estate brokers have changed careers or left the industry recently.

The number of real estate brokers, which used to be around 300,000, was down to around 100,000 by the end of last year. Many people quit their jobs because their income was no longer enough to cover their expenses compared to before or because their businesses laid off or stopped operating. Most of these people were new to the profession.

Since the end of 2022, Ms. Hong Duc (born in 1995) has quit her real estate brokerage job in a large urban area in the East of Hanoi to switch to working as a sales staff for an English center in the inner city.

Ms. Duc said the reason for quitting her real estate job was because her business was facing difficulties. The investor no longer developed the project in Hanoi but moved to other provinces quite far away. When the market was bustling, even though she was a newcomer, her average income was still around 30 million VND/month. In the last months of 2022, her income was only around 10 million VND.

Her current income from working for the English center is between 15-25 million VND/month depending on the sales achieved. She said she has no intention of returning to the real estate brokerage profession.

Unlike Ms. Duc, Mr. Le Van Ly (born in 1989) has more than 10 years of experience in the market and said he is still persistent in his job because he loves his job. He said that compared to the peak period when he earned 200-300 million VND/month, his income has now decreased 7 times. The number of brokers at his unit has decreased from 70 to 7.

He said his current income from real estate comes mainly from real estate transfers or leasing brokerage. To increase his income, he does many other side jobs such as selling coffee, agarwood or interior decoration.

This male broker said that he had been hit by the last real estate crisis, so he had experience and confidence that the market would bounce back. At this time, those who can stick around like him will have much more opportunities than those new to the profession.

Many experts say that the brokers who are still active are those who love their jobs and are determined to pursue them to the end. This is considered a natural elimination mechanism of the market, only professional brokers with internal strength, accumulation, and reputation can survive.

Source