Failure rates among Dubai's estate agents are way too high
Sizable number of such businesses are going bust, and it's not just to do with market
What does it take to be a successful agent or agency in the Dubai real estate market?
As of 2016, there were 5,933 active agents in the market with a total of 2,285 registered offices as per a Dubai Land Department report from that time. Currently, there are 2,672 active agents and 969 companies in the market, based on September data from a private real estate portal.
That doesn’t mean all the agents or companies in the market are on that portal; so let's consider another 20 per cent agents and companies are operating.
As per our best guesstimates, there would be about 3,200 active agents and about 1,160 active companies. That means for every 2.75 agents, there is one real estate company. Odd metrics, right?
Well, one of the reasons for this is that anyone and everyone who thinks real estate is an easy business feels obliged to open their own company. The majority do end up failing.
I would go as far as saying that perhaps from this list of active agents or companies, only about 25 per cent are aware about the regulations in the real estate industry and performing to their true potential. Let’s not talk about the 75 percentile, let’s talk about the 25 per cent who turn out to be successful.
Weak on basics
The job of a real estate agent is not easy, period. I’m not saying any other job is a walk in the park, but for an agent, like any other sales role, it’s all about the income they are able to generate that dictates their take-home.
What does it take to taste success?
The barrier to entry for this role is low, which results in many aspiring individuals having a misplaced perception of this role as a money-generating machine that requires limited input and knowledge. A majority don’t have a basic knowledge about contracts or legalities.
While the most important aspect of this field is to understand how to deal with clients, which one can only learn on the job or through training, clients appreciate agents who have their basics in place:
● Understand the basic calculations of investment, rental yield, service charges, mortgage payments, gross and net income; so you can guide your clients better.
● Understand how to draft and review contracts that your clients are signing as a lot of bad investments can be credited to weak contracts.
● Understand the legality of transactions, how to best protect your client interests, and what fail-safe procedures to implement in case something goes wrong.
These are some of the basic principles that are so vital, but easily ignored by that 75 percentile of agents.
- Aakarshan Kathuria is Managing Director of RiseUp Holdings.