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Property market gets frozen, trade floors shut down   2011-11-27 - TBKTSG

The lackluster real estate market has not only made real estate developers suffer, but has also made trade floors redundant. A lot of real estate trade floors, which mushroomed several years ago when the market heated up, have shut down.

Cienco 585 trade floor

There have been no official statistics about how many real estate trade floors out of the 319 floors in HCM City have to shut down due to the lackluster market. However, experts have affirmed that the number is relatively high.

The Tran Nao road in district 2 of HCM City was once called the road of real estate trade floors with floors in close proximity. However, the road with the highest number of trade floors has become quite different now, since a lot of the floors have disappeared.

Instead of real estate trade floors, people now can see fashion shops, construction materials shops or groceries. Except the real estate firms which set up their offices here, the number of other trade floors is so small that they can be counted on the fingers.

A director of a real estate trade floor which once set up an office in the area, revealed that very few successful transactions were reported recently, which meant that the trade floors could not collect brokerage fee and the modest revenue has forced them to shut down business.

A colleague of his, who also has to shut down his office, said that the land market in district 2 has become nearly saturated with very few successful assignment deals. Transactions now mostly are made on the apartment market. However, it is also very difficult to find the buyers in the market at present.

A director of a trade floor which sets up the office in district 1 said that only big trade floors with healthy financial capability can survive the current difficult period. Meanwhile, though there were a lot of trade floors, most of them were small and not financially capable enough. Therefore, it is understandable why they have to shut down business.

In principle, real estate floors can provide a wide range of services, from serving transactions, acting as brokers, assessing real estate products, giving consultancy, making advertisements, organizing auctions and providing real estate management services. However, in fact, very few trade offices can provide all that kinds of services, while most of them focus on the brokerage service.

The director said that in general, a trade floor needs some 300-400 million dong a month to pay for the office premises rents and for officers’ salaries. Meanwhile, the trade floor can enjoy the commission of 2-3 percent of the values of products. As such, it needs to arrange at least 20 successful transactions a month to earn enough money to cover the expenses. Meanwhile, 5-10 successful transactions would be a dream of many trade floors in the current circumstances.

Also according to the director, not all the trade floors have the good prestige and good relations with real estate developers in order to get the right to distribute the apartment projects which have reasonable prices and advantageous positions. Therefore, the trade floors which do not have diversified products and only rely on selling apartments, find it difficult to survive the current difficulties.

Marc Townsend, Managing Director of CB Richard Ellis Vietnam, said at a workshop held in HCM City on November 23 that no one can say for sure what is the “bottom of the market”, while the price decreases have occurred in all market segments, from office, retail premises and apartments in the last 10 consecutive quarters.

A question that still has not found the answer is that when the market will get better. Meanwhile, real estate developers have been trying to boost the sale of their apartment projects.

According to Cushman & Wakefield, HCM City would have 13,000 more apartments to be marketed by the end of the year.

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