The Dubai-based property agency S&K Estate Agents, better known as Smith & Ken, yesterday confirmed that it has filed for bankruptcy.
All 80 staff in both its Dubai and Los Angeles offices have lost their jobs and a liquidator has been appointed to handle the firm’s affairs, according to a statement issued by a public relations company acting on behalf of one of the shareholders.
“Unfortunately we have had no other choice but to file bankruptcy and hand over accounts and any remaining income to our liquidator,” the statement from the shareholder said. “Simply put, the revenue being generated by the business drastically reduced over the first half of 2015, without enough income to cover operational costs.
It was not immediately clear what company is handling the liquidation.
“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.”
S&K Estate Agents had been registered with Dubai’s Real Estate Regulatory Agency as a brokerage. At the time of going to press, Rera had not replied to requests for comment.
S&K said that “as a last resort” to find more experienced agents, it had embarked on a heavy recruitment drive during the first half of 2015, using local agents in Dubai and the United Kingdom.
“However, the fruits of this process did not transpire in time to save the organisation,” it said. “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.”
It added that current market conditions in Dubai were a factor, with the number and value of property transactions falling, and costs such as advertising, licensing and visas mounting.
On Sunday, The National reported that Dubai Police were investigating a vandalism incident at the company's offices at Concord Tower in Dubai Media City following the firm's closure.
David Godcheaux, the chief executive of Dubai-based Core Savills, said that he did not think market conditions were becoming more difficult for brokers, but he did believe smaller players would face challenges as the market matures.
“If you take Dubai as a whole, brokers have been spoiled. It’s true that salaries, advertising and other costs are increasing and margins have declined over the past couple of years, but margins are still much higher here than in London, New York or in other mature economies.
“There is still less competition here and lower overheads. Some of the brokers complaining about costs should try to open up in Singapore, Hong Kong or even in Paris.”
mfahy@thenational.ae
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