Dubai: Private developers in Dubai are offering never before seen commissions to property brokers - of even up to 15 per cent – to get buyers on board for their offplan projects. The higher commissions come in as offplan sales now make up well over 70 per cent of Dubai property market volumes on a month-on-month basis.
More offplan launches in recent weeks mean the pressure is intense on the concerned developers to bring in early buyers. At the same time, with so many competing projects being available offplan, developers believe that offering brokers more is the only way to get the necessary sales gains.
Earlier, the commissions were around the 4-7 per cent mark. (Interestingly, on ready property sales the commissions remain around the 4 per cent mark on average. And the commissions on rental deals remains at 5 per cent.)
To be an estate agent in Dubai requires clearing the certification process and being licensed by the Land Department. The certification process usually takes about 6 weeks, but someone with the right skills can get through the process faster.
Meanwhile, a recently launched recruitment firm - SG Recruitment Group - said that it had relocated over 200 professionals worldwide to Dubai since January.
A most 'lucrative' job
All this has meant being a ‘successful’ broker in Dubai has become one of the most lucrative jobs to be in.
“Emaar’s projects – the new one such as the Oasis and recent launches such as the Beachfront - have a ready client base, and they don’t need to give out higher commissions,” said the agent. “Even Nakheel with its Palm Jebel Ali releases is in the same category.
“With another big name – Aldar – launching its first community project (Haven) in Dubai last week, other developers have to incentivize their brokers even more to be in the limelight.”
According to multiple estate agents, even the bigger private developers in Dubai are now offering commissions of 10-11 per cent on their newest launches. (The Dubai Land Department has in the recent past tightened rules on multiple brokers marketing various projects, which meant developers have a smaller pool of agents to work with.)
In our experience, the Dubai property market has heavily incentivized off plan sales with 6-8 per cent becoming the norm from premier developers.
“When we look at smaller developers (with one or two ongoing projects), the commission figure touches or moves past 10 per cent. Basically, we as brokers get a two tier system with a standard commission of 5 per cent on any sale with additional incentives for bulk sales (in excess of Dh10 million).
“This is far more lucrative than the ready home sales market, which is why Dubai property transactions are dominated by offplan.”
This has been an exceptionally busy month for offplan launches, and everything points to more activity through the rest of the year. It all adds to the pressure on developers and brokers, with more indications coming through that the growth in overall property sales will see some stabilization.
Some developer sources, however, say talks of growth slowing down is premature.
“Buyers queuing up overnight to secure newly launched units represent a surging demand,” is how Nima Khojasteh, Executive Director - Sales & Marketing at Azizi Developments, puts it.
But these are the exceptions as the offplan sales mantra for a vast majority of developers becomes 'sell fast'. Brokers definitely will not be complaining if they get to pocket double-digit commissions for their efforts.