The introduction of Dubai Land Department’s new online platform will cater all property transactions in Dubai. Buyers, sellers, tenants, and landlords can easily negotiate online even though parties are anywhere in the world. The DLD’s Real Estate Self Transaction (REST) is set to start the digitisation of Dubai real estate market and will be implemented by the first quarter of 2020.
Using the technology of blockchain, all property transactions are secured and manipulated in a highly complex online system. However, the role of brokers might be affected by such advancement. As this new system is expected to create transparency and efficiency in all property transactions, putting so much pressure on most brokers in Dubai.
The initiative to move all property transactions from physical handling to electronic platform could also create pressure on commission rates of most property brokers in Dubai. Currently, there is an average 2-4 percent broker’s commission for every property purchases and leases as well as a higher rate of 5 percent for property management services. This is where DLD’s REST platform will affect brokers, in fact, the upcoming new system will also allow landlords to do similar transactions online easily and quickly and that avoids the need for property management and the service of an agent.
Consequently, property developers in Dubai will have to reduce the role of the brokers, as they can sell directly to the buyers using their in-house sales teams. Or they can bring in just one or two agencies to handle their projects exclusively. All will cause fewer deals and transactions for real estate agencies operating in the city.
So, is it the DLD’s REST will cause a downturn in Dubai’s brokerage businesses?
The answer is “No”, not at all. It is true that this new platform will affect the city’s brokerage but it will definitely not take the agent’s role away. However, property agents may have a different role and revise the process to cope with the current advancement. Since Dubai is heading to digitisation era of the property sector, brokerage businesses will have to evolve alongside.
Some speculations from industry sources say that what could happen is, small-ticket transactions will be done directly through the portal but brokers will still focus in the bigger-ticket transactions i.e. Buying a villa in Emirates Hills worth Dhs 20 Million.
Moreover, property experts believe despite the introduction of REST, agencies will still handle more market advice and assist investors using the expertise as well as market experience, especially in today’s competitive property market. There are also numerous incentives and transactions differences regarding payment terms, cash-backs, guaranteed rental income or deposit substitution.
Blockchain to affect real estate portals in Dubai
Using the land department’s online platform, sellers and landlords can easily find prospective buyers and tenants. There is no doubt that the Dubai Land Department platform will become a staple online portal for all property transactions in Dubai. That's why real estate portals in Dubai will carry the pressure once the initiative takes place.
Real estate portals should consider restructuring their commission or even recast their role in the buyer-seller transaction. As the new land department’s Real Estate Self Transaction (REST) platform will create pressure on the broker's commissions and even much higher push for property portals in Dubai.