A Dubai-based real estate agency has filed for bankruptcy and terminated operations, it announced on Tuesday.
S&K Estate Agents (also known as Smith and Ken) has been handed to liquidators in a process to pay back creditors, a statement said.
The company filed for bankruptcy on Tuesday July 21, 2015 and has been terminated in its entirety, with both Dubai and LA offices shut down.
All the 80-plus employees have lost their positions and the brand itself is no longer active.
“Unfortunately we have had no other choice but to file bankruptcy and hand over accounts and any remaining income to our liquidator,” the shareholders said in a statement.
“Simply put, the revenue being generated by the business drastically reduced over the first half of 2015, without enough income to cover operational costs.
“Additional support, advertising, incentives and training had been provided to existing and new agents to try and aid their growth and development to increase sales.
“As a last resort to find more experienced agents, the shareholders invested a considerable amount into a heavy recruitment drive in the first half of 2015, using recruitment agencies in both Dubai and the UK. However, the fruits of this process did not transpire in time to save the organisation.
“Poor service levels provided by the brokerage led to a number of complaints from clients, which deterred repeat business opportunities and created a poor reputation for the company, which is the graveyard for any serviced-based company,” they said.
The company also said it was hit by the current market conditions in Dubai, with property transactions down in both in number and value during the first half of 2015.
“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. These factors, combined with the increased costs of licensing and visas, made the situation untenable,” they said.
“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 one per cent per transaction to win the business has made it increasingly difficult for larger brokerages to compete.”
The company has Dawn Consultancy as a liquidator to complete the bankruptcy procedure and closure of the brokerage, it added.
Dubai’s property market, which crashed after the financial crisis in 2009, recovered strongly and saw sharp growth after 2012. Rapidly rising prices and the launch of several new projects in the emirate once again sparked fears of a ‘property bubble’.
However, new governmental regulations and increased supply have helped slow the market since mid-2014, with experts predicting up to a 10 per cent drop in property prices this year.
Values for completed apartment units fell 3.5 per cent quarter-on-quarter in Q2, a recent report by ADIB/MPM Properties found.
A report by Core Savillis also noted that residential prices in the emirate will continue to drop until early or mid-2016 before recovering in 2017, in anticipation of Expo 2020.