The introduction of the Dubai Land Department’s Real Estate Self Transaction (REST) platform by 2020 will result in more streamlined and efficient property transactions as well as a consolidation in the brokerage business, experts say.
A Dubai 10X initiative, the digital platform will automate all property transactions between the buyer and seller as well as the landlord and tenant, reduce paper work and do away with the need for physical presence of parties, they added.
Today, some processes require physical presence in DLD centres involving lengthy paperwork. Around 40 per cent of property owners are not based in the UAE and many sales fall through because parties are not in Dubai. The REST platform will help conclude deals with the users being anywhere in the world. Will this reduce the role of middlemen or brokers in the real estate industry? They are more likely to emerge as specialist advisers offering their feedback to buyers and sellers.
“The beneficiary of this will be the consumer. But we must also remember that the primary function of a broker is not to physically transfer the property. This is just one component of the services offered by brokerages,” says John Lyons, head of sales and leasing, Espace Real Estate.
He said the job of the broker is to manage the process by which a buyer and seller with matched requirements and expectations connect with each other as efficiently as possible. It takes time in the market, many viewings and accurate guidance and feedback for the seller. Human involvement is still necessary in this process, he said.
“A buyer usually wants to view several properties before deciding what is the most appropriate property to buy. To arrange 10 different properties for viewings is not a small task. An experienced and professional broker can be of great support in what is a big financial decision for buyers,” Lyons elaborated.
The REST initiative will promote digitisation and more transparency in Dubai real estate and disrupt current working models.
“REST will make transactions faster and more efficient, especially for overseas buyers. We believe real estate agents will continue to have a critical role to play by shifting their focus towards delivering a high-quality experience,” reckons Samer Abdin, general manager, dubizzle Property.
Currently, both buyers and sellers (or their power of attorney) have to be physically present at the time of the sale. The process of a purchase/sale of property requires two steps: 1) An NOC from the master developer; and 2) the actual signature on the transfer document that then leads to the new title deed being issued. At present, this process takes anywhere from three to 10 days, depending on the master developer and the type of transaction involved.
“Every month, we have sellers that fly into Dubai for the sole purpose of transferring a property. This incurs a lot of cost, time and disruption to them and it will delay transfers at times as we look for a date when all parties can be present. To have a system that will mean they don’t have to do this is welcomed. What we will see is the streamlining and increased efficiency in transactions,” observes Lewis Allsopp, CEO, Allsopp & Allsopp.
With a lot of users likely to do away with the need for brokers in small ticket transactions, this is likely to impact their margins and commissions.
“There will be pressure exerted on the middleman margins. What middlemen have tended to do in response is 1) either exchange margins for volume or 2) provide bespoke services at the upper end of the spectrum. In either scenario, it is likely that there will be further consolidation of the property brokerage sector,” suggests Hussain Alladin, head of IR and research, Global Capital Partners.
However, there will still be users who have neither the time nor the inclination to deal with everything that brokers do in their day-to-day dealings.
“Take filtering through clients and their requirements and organise subsequent viewings, for example, is not as easy as it seems. There will be persons who want to do it all themselves, so for them, perhaps the role of the broker will have its limitations, but for others, the broker will still be employed. Real estate is changing and companies will have to embrace the change, otherwise they will become redundant,” says Mario Volpi, sales and leasing manager, Engel & Volkers.
Even though the technology will take away many of the pain points in a real estate transaction, it cannot replace the role of an experienced and knowledgeable agent.
“Technology is going to have an ever-increasing role to play and we have to evolve with it. However, a property will still need to be marketed and professional photos will still need to be taken to give it the best exposure,” says Allsopp.
He said the broker still needs to be there to problem solve for clients, cross-sell, talk about the wider area, give insights into the community, advise on market conditions and help settle a nervous buyer.
“The broker needs to be able to negotiate a deal to the satisfaction of both sides. These are just some examples of what an agent does and what the technology won’t be able to,” concludes Allsopp.
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