Brokers Must Adopt Fresh Approach

Article in Emirates Business 24/7

Article in Emirates Business 24/7

Despite the barrage of articles and opinions depicting economic doom and gloom of a mammoth scale, reports of tumbling property values, double-digit percentages losses by developers and property investors (the list goes on), no one is paying attention to the current state of the brokerage industry. The remaining standing companies still believe that, if things are done differently, with a client-centric philosophy, an incisive fact- based approach and a clear set of realistic objectives and values derived from truly objective assessments, the existence of real opportunities in the UAE real estate scene to create and build for the long-term was undeniable.

Pre-2008 saw all manner of people get into the real estate brokerage industry. The lucrative and easy to make commissions were too attractive to ignore. That is fine since there is nothing wrong in wanting to (legally) better yourself or income. But many thought their skills alone were what brought in results – none more so than the plethora of salespeople, who flocked to the field, many of whom were not familiar with properties.

Now, as the UAE property market matures through its first crisis, the nature of selling and buying realty is changing irreversibly and with it a lot of new industry and consumer trends are emerging, one of which is the lack of satisfaction of customers with real estate brokers. According to a survey conducted by Harbor Real Estate in October 2009, 61 per cent of consumers who bought property in the last two years are dissatisfied with the performance of real estate agents who brokered their purchases. What we have here is an indicator that brokerage companies need to shape up in order to survive during and beyond the financial crisis. The level of proficiency in effective consultancy, based on sound knowledge of the market and an understanding of the buyer’s requirements, appears to be the main shortcoming. Buyers today have choice and are more knowledgeable about the market, and they seek advice from professionals whom they feel they can trust. Unfortunately, in the majority of cases, consumers are left feeling disappointed. This lack of trust is producing a lot of challenges for property brokers, including questioning of their standard commission rates, lack of sole representation or appointment and negative pre-judgment and perceptions.

The main concern is that these problems are not only affecting bad and illegal freelance brokers only but also impacting the professional and experienced brokers and overall reputation of the industry as well.

Traditionally, real estate has been viewed as a sales industry. The scenario is radically different in today’s environment. Customers have evolved to become more educated, better informed, more value conscious and demand more for their dirhams. Their expectations of the companies and the brokers they buy or sell through are much higher. They are no longer willing to be pushed around by unprofessional brokers. In short, they want better customer service. So brokers have to work harder and spend more effort and time to regain the trust of buyers and sellers. They need to realise that true and sustainable success comes from repeat business and word-of-mouth.

Customer service is one of the greatest keys that can help real estate service providers succeed. It can literally make or break a company. This is so because the entire business, marketing, sales, leasing and profits depend on customers.

Great marketing can help brokerage companies acquire new customers, but it is great customer service that ensures that the customers keep coming back. According to our survey, most customers quit dealing with a certain brokerage company because of an indifferent attitude towards them from the business owner, managers and/or employees. A typical brokerage company will only hear from a handful of dissatisfied customers; most of the rest of the customers will just quietly go away and never come back. To further compound the problem, a typical dissatisfied customer will tell an average of seven to 10 people about his problem and the bad service offered by the company.

Secondary Market Prices in Springs and Meadows Surge

Article in Emirates Business 24/7

Article in Emirates Business 24/7

Secondary market prices of properties in the Springs have increased in the range of 11-33 per cent since the beginning of this year, while prices in the Meadows have surged in the range of 16-19 per cent in the same period, according to a real estate firm.
Vineet Kumar, Head of Sales, Asteco said: “In Springs, two-bedroom villas currently sell for Dh1.5 million onwards, up 36 per cent from Dh1.1m at the beginning of this year. Three-bedroom villas start from Dh2.8m from Dh2.6m in January.
“In the Meadows, current prices for four-bedroom villas start from Dh3.8m, up 18.75 per cent from around Dh3.2m at the beginning of the year. Five-bedroom villas, meanwhile, are around Dh4.4m now, up 16.5 per cent from Dh3.8m on January prices.”
According to Asteco, in the fourth quarter of 2008, prices for two-bedroom villas in the Springs were around Dh1.75m. In Meadows, a four-bedroom villa was around Dh4.5m during the same period, while a five-bedroom villa was around Dh5.2m.
“Prices in the Springs and the Meadows have seen a quarter-on-quarter steep fluctuation owing to market conditions. It would seem that prices are trying to find stability in these developments and their current levels are trying to catch up with the third to fourth quarter prices of last year,” said Kumar.
He said prices were static in the first quarter and began to rise from the second and third quarter.
Claire Collier, Manager, In-Style Real Estate said: “Currently the average price of a three-bedroom villa in the Meadows is in the region of Dh3.9m and Dh5m. A four-bedroom villa in the Meadows is also in the region of Dh3.9m and Dh5.5m. A five-bedroom villa is currently around Dh5.9m to Dh7m.”
Mohanad Alwadiya, Director, Harbor Real Estate said: “Prices appear to have stabilised in the Springs and the Meadows largely due to the increase in demand.
“The residential market is currently being driven by a flight to affordable assets. The mid- to low-income earners, who were previously excluded from the market due to high prices, are now taking advantage of the new levels of affordability. Projects such as the Springs and the Meadows are in demand, with buyers taking advantage of prices which are anywhere between 35 per cent and 50 per cent lower than the peaks of 2008.”
“When it comes to sales, we have noted a small segment of owner-occupiers that are after building equity rather than wasting money on rent,” he said.
“Overall, although villas and townhouses demand a higher tag price compared to apartments, we believe the investors will still be interested in investing in villas due to the high demand and the high return on investment that these components have been delivering.”
Collier said the Meadows is geared more towards the end-user, since it has became more affordable. “The Springs is a mixture but still offers a good buy-to-let market and is the affordable choice for young families that require a garden area.
“Also, as an Emaar project, banks have been more inclined to lend on it. The Meadows and Springs are both older and more established communities, so when some projects were put on hold, buyers turned to these developments to move into as their homes.”