Sunday, March 2, 2014

Brokers in Dubai finish 2013 with $490m commission

Photo Credit: mx2-foto
Many things have contributed to the improvements in the property market seen in Dubai since the 2008 crash. One factor which is going to ensure that house and rent prices continue to rise is the recent Expo2020 victory. However, fears are growing in the industry on whether this Expo2020 win will force property prices too high, creating another bubble which will one day burst.
After seeing the latest figures released by RERA, the property regulations branch of the Dubai Land Department, renters and buyers can see that the industry is indeed on the increase. In 2013, Dubai real estate brokers made commission totalling a massive $490million (AED1.8bn), based on the total amount of registered transactions made through RERA. Showing a 50% increase in comparison with the figures at the end of 2012, these high commission figures show that the real estate market in the city is far out of the slump in was in after the world economic crisis in 2008.
The commission is mainly earned from the fee that real estate brokers charge, which is, unless otherwise agreed, set at a value of 2% of the total transaction. The high commission is down to the positive atmosphere amongst buyers and renters. Following the Expo2020 win, many have decided now is the best time to invest in property in Dubai as the city will see itself even further transformed and enhanced in the lead up to the event.
This latest $490million figure will be welcomed by industry professionals making them feel secure that the demand for property is increasing year on year, and will ensure that those trying to sell their property will not encounter problems or be left waiting long for a buyer, as they would have been in previous years.
From the point of view of the everyday buyer or renter, many had believed the prices in property would increase too much and too quickly, causing serious problems for investors, and fears grew that developers would build too many residential and commercial properties for the current demand, leaving Dubai scattered once again with half-finished projects and empty buildings. With these promising figures from 2013, however, there appears to be as much demand as there is supply in Dubai’s current property market, and it is predicted that demand will grow even further as more companies move employees here in preparation for the Expo2020.
Another good sign for Dubai investors is the fact that last month Knight Frank forecast that Dubai’s real estate market will be the highest global performer in 2014, making everyone in the market feel more secure. The property consultancy also predicted a price growth of between 10 and 15 percent for next year, pushing Dubai ahead of other leading cities, such as Beijing and Shanghai.
For now, with commissions on the rise and more property being built every day, the property market looks like it will continue to grow. As long as the growth is stable and the industry maintains a steady speed of development, buyers and renters in Dubai can rest assured that, for the moment, there isn’t another property bubble forming. Industry experts have advised that the dire repercussions of the 2008 property crash have made the industry more knowledgeable and careful, meaning they are aware of the red flags and when to notice a problem before a bubble forms, therefore preventing an eventual burst.

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