Abu Dhabi's real estate brokers will face tougher rules

Dubai: Real estate brokers and brokerage firms in Abu Dhabi can expect a further tightening up of rules on how they offer services to clients.

This update to how brokerage services are conducted will form part of a new set of rules Abu Dhabi will bring in across its property market. It will also extend to the creation of homeowner committees at freehold projects.

The updated rules on real estate brokers will be particularly significant given the advances Abu Dhabi has made as a property investment market, especially among a growing base of overseas investors.

New projects are getting bigger, as if clear from the multi-billion dollar Fahid Island development from Aldar. The initial launches of homes there attracted more overseas buyers, many being first-time investors in Abu Dhabi. 

It has also meant that brokers see it as a lucrative market to operate in, and more of them are launching full-fledged services there.

The new Abu Dhabi rules will bring about further ‘transparency’ in all aspects related to how real estate deals are put together.

It is also no coincidence that other emirates with buoyant freehold property markets of their own are also moving to tighten the rules when it comes to how brokers operate. Dubai has brought in multiple updates to its own rules – and specifically how brokers market listed properties for sale or rental.

What will change in Abu Dhabi?

Abu Dhabi ‘always had stringent licensing regulation in place for brokers and real estate agencies’, said Cherif Sleiman, Chief Revenue Officer at the Property Finder platform. “However, these were not necessarily technology-backed and supported by active governance. 

“Abu Dhabi has been making consistent efforts to raise regulatory standards in a bid to drive trust and transparency, promoting other avenues for investment into the UAE.

“The benefits of prompt adoption and execution of laws are regularly revisited and modernised. These govern the licensing of (real estate) agencies, agents and advertisements of properties.

“Abu Dhabi is driving extended regulations, as evidenced by the recent announcements regarding sale, purchase, registration, evaluation, management and operation of real estate.”

According to Sleiman, this movement to bring in updated rules to monitor the real estate sector and professions linked to it is not limited to one or two emirates.

“Sharjah is signaling similar movements, while Ras Al Khaimah and Umm Al Quwain have shown intent to heighten active regulations within their respective real estate industries,” said Sleiman. “This is promising momentum for the (entire property) market, as it grows interest in the UAE.”

What is Abu Dhabi planning for its property market?

It was earlier this month that Abu Dhabi’s department of Municipalities and Transport confirmed that changes to the emirate’s real estate sector are coming.

“The update covers a new definition for real estate activities,” the statement said. 

This will extend to ‘all aspects of the development - including sale, purchase, registration, regulation, evaluation, management, and operation of real estate’.

Not just that, the new rules help ‘regulate and manage all real estate professions and brings currently unregulated roles under a unified regulatory framework’.

So, according to industry sources, what is coming will be as comprehensive as it gets for the emirate’s property market and for all those who operate within it.

“In Abu Dhabi, it is important to note that the new regulations do not mandate more capital,” said Sleiman.

“However, (it will) require further legitimacy of agency and agent activity. We have noticed an increase in the cost of advertising a listing, which incentivizes putting forward only valid listings. This reflects an increase in agency budgets but is not indicative of a massive capital uptick.

“We can expect more details to come to light in the coming weeks, and remain on hand to empower brokerages, buyers and investors with the data and insights they need to make decisions.”

Homeowner committees

The other major change that the new rules will bring in is the setting up of ‘owner committees’ in freehold projects.

“The formation and functioning of these committees will be governed by decisions issued by the Chairman of the Department of Municipalities and Transport,” said the statement. 

Plus, ‘their role (is) limited to advisory and oversight duties’.

Specialised management companies will be the ones responsible for the operational management of the freehold properties, thus ‘ensuring flexible regulation’.

Again, this is of extreme significance given the number of freehold-designated projects that will see completion in the next 3-4 years. And with more on the way…