There has been an increasing trend of direct listings of projects that excludes brokers. More real estate owners in Dubai are going direct in trying to bid for brokers in order to cut down transaction costs. It has been a steady practice during the second half of last year, but saw a spike in the last three months.
Sellers are maximizing all available platforms and channels such as the more modern online real estate portals and old-fashioned word of mouth to try and get through to a buyer.
Buyers can save up because of this move. Average broker fees in such transactions are 2 per cent of the property value, though these could also go up to 4 per cent depending on the property at stake.
Other factors may also be influencing sellers to seek out buyers on their own. “In the current environment of soft prices, a lack of credibility (of some brokers) has certainly played an role in the surge of direct listings,” said Sameer Lakhani, CEO of Global Capital Partners. “In the recent instance of a prominent broker going bust, there were numerous instances of “price gouging” as well as funds being misallocated that came to light.
“The Dubai Land Department and Real Estate Regulatory Agency have taken pains to instill transparency in the brokerage sector and these practices had declined significantly from what was occurring a few years ago.
“What direct listings have done is it has allowed for a more transparent mechanism of price discovery without the middleman resorting to price gouging tactics. In recent documented cases, this has been as high as 5-10 per cent in certain cases.”
This makes the situation even more difficult for local brokerage firms today. In effect, the first half of the year saw a handful of local brokerage firm closures brought about by a lack of clientele.
The direct sell-offs have been higher within the newer communities or within the off-plan developments. Also, most direct selling properties have been for properties tagged as the high-end.
“This is natural as investors — as opposed to end-users — dominate the buying pattern in newer locations,” said an industry source. “As these mature, the incidence of listings reduce as end-users start to dominate. On the other hand, International City and Discovery Gardens still have a large number of listings. Despite these communities being older, they are still dominated by investors as opposed to end-users.”
Sellers are maximizing all available platforms and channels such as the more modern online real estate portals and old-fashioned word of mouth to try and get through to a buyer.
Buyers can save up because of this move. Average broker fees in such transactions are 2 per cent of the property value, though these could also go up to 4 per cent depending on the property at stake.
Other factors may also be influencing sellers to seek out buyers on their own. “In the current environment of soft prices, a lack of credibility (of some brokers) has certainly played an role in the surge of direct listings,” said Sameer Lakhani, CEO of Global Capital Partners. “In the recent instance of a prominent broker going bust, there were numerous instances of “price gouging” as well as funds being misallocated that came to light.
“The Dubai Land Department and Real Estate Regulatory Agency have taken pains to instill transparency in the brokerage sector and these practices had declined significantly from what was occurring a few years ago.
“What direct listings have done is it has allowed for a more transparent mechanism of price discovery without the middleman resorting to price gouging tactics. In recent documented cases, this has been as high as 5-10 per cent in certain cases.”
This makes the situation even more difficult for local brokerage firms today. In effect, the first half of the year saw a handful of local brokerage firm closures brought about by a lack of clientele.
The direct sell-offs have been higher within the newer communities or within the off-plan developments. Also, most direct selling properties have been for properties tagged as the high-end.
“This is natural as investors — as opposed to end-users — dominate the buying pattern in newer locations,” said an industry source. “As these mature, the incidence of listings reduce as end-users start to dominate. On the other hand, International City and Discovery Gardens still have a large number of listings. Despite these communities being older, they are still dominated by investors as opposed to end-users.”