The Dubai-based S&K Estate Agents says it will file for bankruptcy and begin liquidation proceedings, having been hit badly by difficult market conditions.
The real estate agency said its reputation had suffered amid complaints from clients, while a last-ditch recruitment drive to find more experienced agents did not pay off in time.
“Simply put, 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 in the statement quoted by Reuters.
“Current Dubai market factors didn’t help, as 2015 property transactions, both in number and value, have plunged… 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 LLC,” it added.
“These factors, combined with the increased costs of licensing and visas, made the situation untenable.”
S&K, which was better known as Smith & Ken, had around 80 employees and an office in Los Angeles, in addition to its operations in Dubai.
The National reported on Sunday that Dubai Police are investigating a vandalism incident at the S&K office in Dubai Media City, in the wake of the company’s closure and job losses.
S&K that it believed that the brokerage market in Dubai was saturated with too many agencies and too few buyers and investors.
“Many smaller competitors dropped fees to 1% per transaction to win business, which made it increasingly difficult for larger brokerages to compete,” the firm said.
A report released earlier this week by Abu Dhabi Islamic Bank and MPM Properties said that residential rents in Dubai dropped by 3% quarter-on-quarter during the second quarter of 2015, while capital values for completed apartments fell by 3.5%.
Analysts have said that Dubai’s residential property market has lost steam this year due to an influx of new supply, stalling the recovery of the market from the crash in 2008, during the global financial crisis.