How to clean up Dubai's real estate business

  • Share via facebook
  • Tweet this
  • Bookmark and Share

Let’s make no bones about it. It’s a dodgy business, isn’t it? Real estate agents aren’t exactly loved in this part of the world, and despite being at the heart of the industry, I have to agree with much of the sentiment.

Not long ago, Arabian Business ran a feature headlined ‘Imagine a world without estate agents,’ with this magazine making a case to ditch the lot of us and put us out of business once and for all. While I echo some of the sentiment in that piece, such an idea is purely wishful thinking. Buyers and sellers need an independent third party to act on their behalf — quite often because both sides are extremely busy getting on with their own lives and jobs.

But that doesn’t mean the estate agency business shouldn't get its house in order. Which is why I am launching SKAI Real Estate, as part of my own mission to clean up the industry. Will it work? Only you can decide that. Though to begin with, we need to address the key problems and their solutions.

So here is my own five-point plan to start the cleaning-up process.

1. Commissions

Yes, commissions. A very dirty word isn’t it? Largely because it is common practice in Dubai (and the rest of the UAE) for estate agents to bag two percent commission from both parties in a deal. This often gives them a ludicrous four percent fee per deal. That’s AED40,000 for a mere AED1m sale. Plainly too high, and plainly absurd, yet no one in the industry or outside has ever questioned this.

SKAI will fix commissions at 1.99 percent flat — and only from one side. This will be the lowest in the industry, and I challenge the rest of the market to follow.

2. Hidden top ups

Here’s where it gets really messy. We all know it happens — you may think you have bought a flat for AED1m, when the actual price the seller got was AED950,000. You may think you sold a flat for AED1m when the buyer actually paid AED1.05m. Lumping or taking off huge sums to prices is common practice is Dubai. It is wrong, immoral (probably illegal) and yet everyone does it. So my second point is to offer the only guarantee in the market of absolutely no top ups. The price you see is the real price. Again, I challenge the rest of the industry to follow.

3. Represent only one party

It staggers me that most estate agents work for both the buyer and seller. This is a blatant conflict of interest. How can an estate agent possibly give you the best advice when he wants to keep both sides happy? Or to be blunt, doesn’t this mean you are being stiffed?

All the big boys do this in Dubai and it is wrong, and it must stop. So my third point is SKAI will guarantee to only work for one party, buyer or seller. And again, I challenge the rest of the industry to follow.

4. No cold calls

It will come as no surprise to you that most estate agents flog your details to other estate agents and companies as a matter of course. No wonder that you end up with hundreds of cold calls from people you never heard of trying to flog you stuff. Another disgraceful practice, and SKAI guarantees we won’t do this. Come on now, will the rest of the industry follow, or is this how they really make their money?

5. Sticking with you

I have dealt with many estate agents and I know full well that once you hand the cheque over, you will never hear from or see them again. They have your cash — thank you and goodbye.  Any problems that then occur, either with the transaction or the property, are your problem. SKAI will guarantee to stick with you – this may sound like a vague promise, but the proof will be in the pudding.

In the last four years, since the property market crashed, estate agents have rightly taken a battering. The old days of simply picking up the phone and picking up a cheque are gone, and they have had to find new ways to stay in business. Unfortunately, in my experience, even the most so-called credible names in the business have been only too keen to get involved in a range of murky practices. Thousands of innocent customers have been fleeced, and the reputation of the industry is on its knees.

But I disagree with Arabian Business when it says we can do without estate agents. A cleaned up, well run and well disciplined industry can be an asset to the property market, especially as it starts to pick up.

I also know that by boldly stating I am going to clean up the industry, I am making life hard for myself. SKAI probably won’t make as much money as its rivals, we will find it hard to break into the industry and no doubt I will be ridiculed by people telling me to mind my own business, or questioning my credentials. But somebody has to make a stand — and I am happy for that somebody to be me.

Kabir Mulchandani is the CEO of SKAI Holdings, a Dubai-based family-owned real estate investment firm.

Related:
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

Posted by: Ashu Nuthan Ageh


The future belongs to those
who believe in the beauty of their dreams.
A country Law is a country Law, be it real Estate or what ever. That state law most be respected in full, without any discrimination.
Thanks

Posted by: Paul Renton

Valid points and easily resolved, with Exclusive buyers agency signed by the buyer and the buyers agent. A contract from the buyer promising the agent they will receive a commission at the end of the transaction if they represent and protect their clients interests and the buyers agent promising just that. Full service Real Estate and a professional agent who does what they say, stays in touch and earns referrals is what separates the 5% from the 95%. Cut price brokerage is not the answer you have to stay profitable to serve your clients. If this were a legal or medical matter you would want the best and be prepared to pay. A pilot receives a large salary for basically monitoring aircraft systems but in that 10 minutes of emergency would you question their value????

Posted by: ahmd

@Mohammad, i agree that its more like a paid commercial and not Journalism, if you are a stakeholder then how can you be a fair judge

Posted by: Maher zawaydeh

At the end of the day wither it is advertising , marketing, call it guys whatever you like, as long as it will open the eye on the business, and the end user will benefit from it, I dnt mind. I do believe the commission should be paid by one party either the seller or the buyer and yes 4percent is too high. I hope this what's called paid add, will make the competitors in the business realize the market is not in their control anymore. And the end user will benefit. Compition make better service

Posted by: paddy irishman

Of course he is advertising his business.
he had to invest in it.
all what he says is valid though. it is a conflict of interest to both buy and sell, it is manipulative to do so, it is illegal to buy a property and sell it yourself as an agent as that is manipulating the market. it is wrong to have to pay commission on a rental property that you have to find yourself and do all of the leg work including haggle for the rent and then you have to pay five percent of that to some idiot just to sign an agreement. for too many years real estate agents have been manipulating the market and cheating clients.
However the difference is in europe you actually get a proper salary for doing your job as well as a small percentage or bonus of a sale. If real estate agents actually wanted to change the market then they would force clients to sign binding contracts that they are only allowed to sell with one company to stop competing with 20 other companies for the same sale.
I would work for him.

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Time to invest?

Time to invest?

Foreign investors are seeing Qatar as an ideal place to purchase...

1
Heading for a correction?

Heading for a correction?

Property prices may have held relatively steady in Lebanon during...

1
Emaar's 'city of the future' explained

Emaar's 'city of the future' explained

The Iraqi city of Erbil is aiming to build on Dubai’s rapid march...

1
Most Discussed
  • 15
    Germany puzzled as UAE think tank ordered to close

    Matt, your words sound kind of funny given the role the Britain has played in this region for so many decades.
    And given the democratic tradition that... more

    Thursday, 17 April 2014 7:10 PM - one of the joes
  • 10
    UAE father who whipped son to death wins appeal

    "Under Sharia, a parent cannot be executed for killing their child"
    A spouse could be executed if he/she kills his/her spouse, as none of them is... more

    Friday, 18 April 2014 3:38 PM - Nihar
  • 3
    To diet or not to diet?

    It is best to eat by your blood type. Following this diet is miraculous. Generic diets don't always work as certain foods are not good for the individual... more

    Friday, 18 April 2014 11:49 AM - Shamira Mitha
  • 54
    Three UAE women attacked with hammer at London hotel

    I really feel that Arabian Business.Com should now close this comments page. This should be all about sympathy for the families not what it is/has turned... more

    Wednesday, 16 April 2014 1:06 PM - Adrienne
  • 51
    Why Dubai isn't a plastic city

    What is definitely not a plastic city. The Arabs have a culture dating back to several centuries. 50 years back Dubai was just a fishing village. Today... more

    Tuesday, 8 April 2014 3:49 PM - P. MADHUSUDAN
  • 48
    DMCC boss Ahmed Bin Sulayem entertains Robert Mugabe in Dubai

    @fga ''However today, simply because he decided to dispossess a few white farmers of their land and redistribute to the poorer indigenous blacks'' more

    Sunday, 13 April 2014 3:02 PM - Matt Williams