Property developers lay off staff in droves

For the last several weeks Binh in Ho Chi Minh City has been living off unemployment benefits after being laid off by a property company in November.

He said that he was among 60% of staff that were fired, adding that many of his colleagues have stopped applying for new jobs in the property sector as there are few work opportunities.

Minh, who works for a property developer in District 1, says he has not been paid for six months.

Half of his colleagues have quit as they are not able to sell property due to low demand, and the company does not have cash to pay them.

Property developers are going through a difficult winter as demand plunges amid market uncertainties. And experts say that 2022 is set to end the year on a bad note as the real estate sector continues to slide from the booming sales recorded in previous years.

A stock market listed property developer in HCMC has recently fired half of its staff and reduced salaries for the remaining workers by 30-40%. Some employees have to take over the work of three people as a result.

The CEO of the company, who asked not be identified, said: “We cannot give our employees their 13th month salary this year as we have almost run out of cash.”

A construction and investment company earlier this month said it would reduce worker incomes by 20-35% at all levels and that it would also cut benefits and bonuses.

The company has failed to collect several debts from its partners and therefore has nearly zero revenue.

It split its staff into three groups and plans to lay off one group from December until the end of March.

The chairman of a property developer that ranks third in market share in the HCMC and southern localities, wrote a letter to shareholders to apologize for the difficult situation the company is facing.

The company has been laying off a large number of staff due to difficulties such as geopolitical tensions, inflation, tightened credit and the post-pandemic impact.

Huong, a marketing officer of a property developer in District 3, said that at the end of November her company said it would cut salaries by 40% until further notice.

“This is a large cut,” he said. “Employees who have to take care of their families have started to quit as a result.”

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, said that the property market is going through many difficulties and that a number of property developers will have to make “painful” decisions to survive, including scaling down investment, delaying new projects, and laying off employees.

Huynh Phuoc Nghia, an analyst with consultancy firm GIBC, said that only companies that are flexible enough to restructure and make changes can survive the challenges which are set to remain in 2023.

The challenges include delays in policy changes, an unfavorable market, unhealthy financial health and a cash shortage due to abusing leverage, he added.

Property developers have been making a living by taking advantage of people’s expectations for a long time, and now that the market has hit real difficulties, they struggle to stand, Nghia said.

He added that companies have to accept selling at a loss for the next 12 months to get through the trough season.