27 December 2018
Dubai: The Broker
An overview of brokerage commissions in the real estate industry reveals that globally the range is between 2% to 8%. Although most countries do not have laws regulating commissions, the amounts can vary on a deal to deal basis, but usually remain within the market norms from that country. Within the 8 countries we witness that UAE has lowest commission at 2% (1% buyers’ broker and 1% sellers’ broker) in the secondary market.
In markets that experience liquidity shortages, the role of the broker becomes paramount; incentives therefore have to rise in order for liquidity to be channeled to these markets. Larger developers have done so, incentivizing the middlemen with generous incentives in order to clear inventory; this has come at the cost of reducing velocity in secondary markets.
We opine that brokerage rates will rise to international norms in the coming months, as secondary market investors start competing on that dynamic in order to get access to liquidity.
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