Is Dubai’s real estate sector in trouble?
In recent years, real estate brokers did see an increase in both property transactions and commissions; an increase of 16% from operations recorded in H1 2017, compared to H1 2016.
But this year, there was a recorded 22% decrease in transactions.
Is the real estate brokerage in trouble as a result of this slowdown?
There are 5,181 brokers in the sector who have suffered a 30% drop in commissions, this year.
Where is the trouble?
Real estate brokers in Dubai made commissions totaling $155 million in the first half of 2018, according to statistics released by DLD, $68 million less compared to last year’s $223 million.
These came to a result of 27,600 transactions during H1 2018 compared to last year’s H1 sales totaling 35,600.
AMEinfo found that although, property prices are decreasing, material costs to build these properties have increased significantly, according to Deloitte.
Material cost increased 3.1% when comparing Q1 2017 to Q1 2018, says Deloitte.
Another factor that could have decreased sales is that, although property prices are falling by an average of 4%, rental rates have declined by 14% in the UAE on average (including Dubai), Asteco, a real estate research firm, said.
Current construction and real estate sectors appear in difficulty.
However, the future of these sectors doesn’t.
Investors will come soon
Data from the DLD and other sources shows that the property market might see a boost in H2 2018 and all throughout next year as approximately 20,000 residential apartments are expected to be delivered.
Some of which are targeted at investors and others for Expo 2020.
Also, individual developers are offering multi‑year payment plans, with many offering up to 60% of the purchase price payable post‑completion.
This is aimed at capturing demand from the affordable segment and in some cases to turn renters into buyers.
Yousuf Al Hashimi, deputy executive director of DLD’s Real Estate Regulatory Agency, said: “We appreciate the essential role played by authorized and licensed real estate brokers, and we encourage customers to choose brokers who hold ‘real estate broker’ identification cards.
“The accreditation system for brokers that was set in place by Dubai Land Department was initiated to sustain a secure real estate environment for all parties in the market.”