Real estate firms have had to struggle to survive during the COVID-19 pandemic, which has caused the loss of trillions of dong and job losses to 75-80 percent of workers in the field.
The deputy general director of a real estate group specializing in developing urban areas in provinces adjacent to HCM City said Covid-19 has upset the business plans and structure of the company.
To cut costs, the firm has laid off workers in large quantities. The number of workers has fell from 2,000 in 2019 to 500, which means 75 percent of sellers have been dismissed.
As for the remaining 25 percent of workers, he said the company has advanced them to to change jobs because there is low possibility of market recovery in 2020.
While the company sold thousands of land plots and street-front houses worth over VND3 trillion, it did not earn any money in the first five months of 2020.
The manager of a real estate firm in district 3, HCM City, said his firm had no new projects marketed in the first six months of the year, which was the worst period for the company in the last five years.
To minimize the risks caused by the cash shortage, the firm cleared stocks by selling at a discount rate of 20 percent.
Real estate distributors and brokers have also been sitting idle since the Tet holiday.
According to the deputy chair of the Vietnam Real Estate Broker Association, there were 1,200 real estate trading floors as of the end of 2019, including 500 in HCM City and 300 in Hanoi. When the pandemic became more complicated, 80 percent of the trading floors suspended operation in February, March and April, while most of the remaining opened only online.
Nguyen Loc Hanh, CEO of Ngoc Chau A Real Estate Investment JSC, commented that real estate firms are at high financial risks because of Covid-19. The pressure on cash flow will still last until the end of the year, or even longer, depending on the health of businesses.
The CEO said Covid-19 has weakened the purchasing power in the market, which is the biggest concern.
If the pandemic had not broken out, customers would have made payment for products for which they had registered and banks would still have disbursed money as planned.
But COVId-19 has slowed the cash flow. Clients, investors, banks and brokerage companies all lost liquidity temporarily, and they gave priority to keeping cash.
According to Hanh, during the 2008-2009 crisis, the market collapsed just after one “knockout” . During Covid-19, a battle with many rounds, businesses are getting worn down.
This article was originally published in VNA