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A friend of mine was looking to buy a property within a gated community in Dubai. As everybody else, he did his own research, but was disillusioned at the end of it. He then called several agents to identify the right property.
But unfortunately, all the three agents that he got in touch with had the same property to offer.
This situation needs to be rectified. As Dubai's property market matures, there is an urgent need to control the issue of multiple listings to avoid misinformation in the market. This can be controlled by introducing more transparency in transactions and encouraging buyers and sellers to deal with genuine agents who have complete knowledge of their areas/property.
However, many a time, motivated sellers, particularly those who are not sure of the market, tend to list their properties with multiple agents, thereby creating a false supply. Educating such owners about the futility of multiple listings is important.
Owners might believe that listing their property with many agents can help them achieve the highest price. In reality, it only misleads buyers about the price. Therefore, I would highly recommend owners to list properties with reputable agents who have a complete market knowledge.
Many buyers also refrain from buying properties listed with many agents thinking that the property is not sellable. In some overseas markets, there are regulations to control the maximum number of listings a certain property can have.
As a result of various regulatory changes implemented by the authorities to prevent the market from inflating, the Dubai real estate sector has entered a phase of price correction. The total value of transactions has dropped.
However, I found that the number of listings remained the same. In today's scenario, there are about 60,000 to 70,000 properties for sale in the market as per some of the popular property portals in Dubai.
I phoned a few of them and noticed that the ''actual'' number is significantly less. Now this was a major revelation to me. The same applies to the rental and sales market. You might think you have ten listings for a one-bedroom apartment in Motor City... but when you start inquiring, most of the agents end up telling you about the same apartment.
Another thing that I found was that such redundant listings were more common in upmarket locations such as Dubai Marina, Downtown and JBR. For instance, there are nearly 12,000 apartments listed for sale in Dubai Marina, whereas only 1,100 are listed in Discovery Gardens. In some instances, such as at Burj Views, the total number of listings over the last two months is actually more than the total units in the buildings.
The reason behind such a massive misrepresentation and misinformation was the fact that several subagents/third-parties are involved so as to rake in the benefit of a commission. Such malpractices will complicate the entire buying and selling process.
I can foresee a scenario where buyers end up talking to several agents for the same property, and the seller gets a (fake) sense of demand as he might be talking to many agents about the same property. Such a false sense leads to incorrect pricing in the market and the deal cannot be finalised.
Although the total number of property brokerage firms has reduced from 8,000 to 2,205 in 2014, the problem persists. There are still a number of unregistered agents who operate in the market and want to claim their share of the pie.
Structured regulations are necessary to protect the market. Rera (Real Estate Regulatory Agency) has introduced a number of regulations to reduce the number of brokers in the industry which is a great step forward. The pass mark for the mandatory test for the renewal of broker's license will be increased from 75 to 85 per cent at the start of 2015.
The broker cards will be phased out by June next year, with registration being linked to an Emirates ID. Also the new brokerage firms will be allowed to employ four agents for the first year and any increases to depend upon the firm's transaction performance. Agents who have not completed a transaction for anywhere between six to 12 months will receive a letter from Rera warning about their performance. If there is no improvement then Rera will cancel their registration.
Such initiatives of having only registered agents with genuine properties will make the market more realistic.
Get tips on how to check a real estate agent's credentials
Source: Robin Teh, Special to gulfnews.com
The writer is the Country Manager — UAE at Chesterton MENA