With the real estate market frozen, how are real estate brokerage firms doing business?

In the second quarter of 2023, the real estate market showed no signs of recovery. The entire market recorded a low number of transactions, and the number of new real estate products launched onto the market was almost zero.

The Q2/2023 and first six months of 2023 business results of a series of real estate brokerage companies clearly show the challenging situation of this type of business.

Revenue plummeted, profits fell sharply.

According to its Q2 2023 financial report, Danh Khoi Group Joint Stock Company (HNX: NRC) recorded a sharp 55-fold decrease in consolidated net revenue compared to the same period last year, falling to just over 1.9 billion VND. Revenue from real estate consulting and management services and revenue from investment cooperation projects were zero. Only brokerage and other services brought in over 1.9 billion VND for Danh Khoi.

Therefore, even though the cost of goods sold was drastically reduced to nearly 38 million VND, the company still only had a gross profit of 1.9 billion VND (compared to a gross profit of over 89.5 billion VND in the same period last year).

For the first six months of the year, the company only generated over 1.9 billion VND in net revenue. After deducting all expenses and taxes, Danh Khoi reported a loss of 3.8 billion VND in the second quarter of 2023 and a loss of over 20.6 billion VND in the first half of 2023.

The company's inventory as of June 30, 2023, also remained unchanged compared to the beginning of the year at VND 61.13 billion, mainly consisting of work-in-progress production and business costs.

Similar to Danh Khoi, Dat Xanh Real Estate Services Joint Stock Company (Dat Xanh Services, HoSE: DXS) recorded revenue of VND 662 billion in the second quarter of 2023, a decrease of 49% compared to the same period last year. While revenue halved, the cost of goods sold only decreased slightly by 15%, resulting in a gross profit of only VND 150 billion for Dat Xanh Services, less than a quarter of the same period last year.

In its explanatory notes, Dat Xanh Services revealed that revenue from real estate services experienced the sharpest decline, falling by 73% to less than 192 billion VND. Besides the decline in net revenue, the company's revenue from financial activities also fared poorly.

Therefore, at the end of the second quarter of 2023, Dat Xanh Services recorded a loss of VND 17.2 billion, while in the same period last year it had a profit of over VND 256 billion. This marks the third consecutive quarter that the company has reported a net loss.

For the first six months of the year, the leading real estate brokerage firm reported a loss of over 61 billion VND, a significant drop from its profit of 474 billion VND in the first half of 2022.

The reported after-tax profit is "as thin as a rice leaf."

In a somewhat more positive light, Khai Hoan Land Group Joint Stock Company (HoSE: KHG), despite recording a sharp decline in revenue in the second quarter of 2023, still managed to salvage some net profit.

Specifically, Khai Hoan Land recorded net revenue from sales and services of only over 3.3 billion VND, a decrease of 80 times compared to the same period last year. This was due to the company incurring additional sales returns amounting to 31.8 billion VND, which almost completely eroded the company's revenue in the second quarter of 2023.

In addition, in the second quarter of 2023, the company only earned over 12 billion VND from real estate brokerage revenue, while the figure for the same period was over 271 billion VND.

Conversely, the company's financial revenue was a bright spot, reaching over 109 billion VND, while financial expenses were reduced by almost half, down to 26 billion VND.

However, the sharp decline in revenue from core business activities also affected Khai Hoan Land's profits. At the end of Q2/2023, this brokerage firm reported a 48% decrease in profit to 45 billion VND. For the first six months of the year, Khai Hoan Land's net revenue reached 263 billion VND and after-tax profit reached 101 billion VND, representing decreases of 43% and 35% respectively compared to the same period last year.

Similarly, despite having employed thousands of real estate brokers and being renowned for its professionally trained team, Century Real Estate Joint Stock Company (CenLand, HoSE: CRE) also faced the situation of having extremely thin profit margins.

Specifically, in the second quarter of 2023, the company recorded net revenue of nearly 401 billion VND and net profit of over 9.5 billion VND, a decrease of 35% and 88% respectively compared to the same period last year.

Explaining these results, the company stated that the real estate market in the second quarter continued to face many difficulties and unfavorable factors that emerged in 2022. Although the real estate and capital markets have improved compared to the first quarter, they have not yet truly recovered, and transactions are still not very active.

Speaking at the 2023 annual general meeting held at the end of April, the CEO of CenLand stated that the number of brokerage staff at the company has decreased by approximately 40-50% to date.

In addition, Cenland's Chairman of the Board, Nguyen Trung Vu, shared at the general meeting that, on average, they have to sell off about 2-3 apartments each month, essentially at a loss, to keep the company afloat. He believes there are still a few hundred apartments left to help the company get through this period.

Looking at the cumulative revenue structure for the first six months of 2023, real estate brokerage and investment services continue to be the main driver of CenLand's revenue. However, profits in this segment have fallen sharply to below 5 billion VND; the net profit margin for this segment is only 1% (compared to 10.7% in the same period last year).

Is the real estate brokerage profession still attractive?

A report by the Vietnam Association of Real Estate Brokers (VARS) on the health of the real estate market shows that the volume of transactions in the past period is less than 50% compared to last year. Both supply and demand in the market have decreased significantly, causing many businesses to continuously report losses, and real estate brokers to be mired in difficulties, poverty, and unemployment.

VARS believes that the difficulties in the real estate market are clearly reflected in business results, with many brokerage firms reporting losses in the first two quarters of 2023, marking the worst period since 2017.

Previously, VARS data showed that the estimated number of active brokers was only about 30%-40% compared to the beginning of 2022.

Notably, brokerage firms or developers with sales brokerage departments have laid off 50% or more of their staff through various means such as temporarily suspending contracts for 3-6 months, termination of employment, or maintaining a freelance/collaborator status.

Layoffs are not limited to leading companies; even smaller businesses are experiencing more severe situations.

The real estate market in the first six months of the year remained in a prolonged slump.

VARS believes this is a challenging period for brokerage firms that lack the competitiveness to survive, but also an opportunity for professional firms to rise and develop more sustainably.

Nevertheless, VARS believes that the career prospects for real estate brokers remain strong despite the current difficult market conditions and numerous challenges due to high competition. Therefore, brokers must constantly learn, continuously improve their skills, and maintain professional ethics and credibility with clients .

Source: https://www.nguoiduatin.vn/thi-truong-nha-dat-dong-bang-loat-dn-moi-gioi-bds-kinh-doanh-the-nao-a622124.html