For some time now RERA (Real Estate Regulatory Authority) and the Dubai Land Department have been gradually implementing standardised forms for Brokers to use throughout the sale or lease of a property, such as Form F, agreement between Seller and Buyer or Form B between the Broker and the Buyer and Form A between the Seller and the Broker.
From the beginning of this year, it is now imperative that Form A is signed for any Agent to be able to list a property online, advertise in the newspaper or even social media. The agreement contains all information about the property to ensure transparency and also states clearly commissions, prices and timelines.
So why am I telling you this?
It is no secret that we have an oversupply of property currently in Dubai; I wrote a report back in June that we had an issue with supply and demand (link at the bottom of this report).
The supply the untrained eye sees on popular property portals can sometimes be overwhelming but to the trained eye, we can almost guarantee that at least 5 of the 20 x 2 beds available for sale, say in JBR Sadaf, for example, are the same ONE property. There are many reasons for this:
- The seller believes the more agents he/she lists with the quicker the sale or better the deal. This is so not true Dubai is unlike any other market as Agents work the entire City, not just a couple of streets in London or a small Village or Town. Most Agents in Dubai work on split commissions with each other so this saves the hassle of Sellers and Landlords speaking to multiple Agents. The new system will make this a lot harder and encourage the Landlord or Seller to pick one or two Agents instead of many.
- Some Agents will list properties that are not available or are not listed directly to them to receive inquiries from potential Buyers or Tenants so they can look for another property for them through another Agent. This cannot now happen as a signed form and legal ownership documents have to be uploaded to receive a permit number to advertise.
In conclusion, I believe this is a revolutionary move for the Property Market in Dubai and will regulate and show the true availability of properties on the market.
Presently I am being asked a lot about what the immediate future holds for the Dubai Property Market. I believe that we will continue with a further decline in prices for the next year or so largely due to the number of properties becoming available but it will also be impacted by global markets, such as the UK and BREXIT, the Pound is expected to drop and currently is already at its lowest against the Dirham, meaning the Dubai Market is not as impressive as it was before.
Forecasters predict a fall to AED4.05 to the Pound in December 2019 (data from poundf.co.uk) not so long ago you could get nearly double the Dirhams to the pound, resulting in house prices being double if you are bringing British Pounds to the UAE.
There are a few areas that need looking at to ensure the Dubai Property market remains attractive over the next couple of years, below are some listed, note that this is my opinion.
- Non existent 1st time buyers as the deposit and fees of 33% are impossible to save (estimate 6 years of living on a budget to buy a one bed in the Marina for AED1.3m if you are on a salary of AED20,000 per month) – one way to solve this issue is to offer more rent to own schemes.
- Companies are employing younger staff on lower salaries that are happy to share apartments which is leaving more vacant – one way to help would be to offer 12 chq payments on rents so that the initial cost of moving and setting up or moving in Dubai is lowered considerably.
- Developers who sold off plan at high rates 2-3 years ago should look into assisting Buyers with final payments by offering them assistance with post-payment agreements.
- A proposed law mentioned at the beginning of the year would be a great benefit to the market should it be revisited. The Gulf News stated that developers can not sell off plan until at least 50% of the property is completed. If this happens it will help with the confidence of Investors and also ensure purchased off-plan prices are closer to resale prices.
I want to take this opportunity to wish you a Happy New Year and I hope to do business with you in the near future.