One of Dubai’s biggest property brokers shut its doors after filing for bankruptcy, saying plummeting property prices and a drop in transactions caused revenue to decline.
S&K Estate Agents LLC, known as Smith and Ken, was handed to liquidators and the company was terminated with the loss of about 80 jobs, according to a statement Tuesday from the company’s shareholders. S&K filed for bankruptcy on July 21, the statement showed.
“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. “Current Dubai market factors didn’t help, as 2015 property transactions, both in number and value, have plunged.”
Dubai’s home prices are falling this year for the first time since 2013 because of declining oil prices and an oversupply of properties. Values may drop by as much as a fifth this year, according to Standard & Poor’s, while brokers CBRE Group and JLL Inc. see a 10 percent decline.
“There’s been a general slowdown in completed property sales over the past year, so it’s a difficult time for agents like S&K that rely solely on that sector,” Matthew Green, head of United Arab Emirates research at CBRE, said by phone. “More buyers now looking at off-plan properties instead of completed ones.”
S&K also said its own poor service levels and increased advertising prices contributed to the company’s struggle, as did increased competition.
“After years of profitability, we believe the brokerage market is saturated -- too many agencies without the population and investment to match,” it said in the statement.