Estate agents seeking their fortune in Dubai are facing the reality that the city’s streets may not be paved with gold and that easy money from a booming property market is harder to find.
A report suggests that new agents are quitting the UAE’s property market after just three months, as experienced brokers warn of the pitfalls of an overcrowded industry.
Despite record sales volumes, average commissions have plummeted to about Dh18,000 a month, leaving novice agents fighting over scraps to keep up with the rising costs of everyday life in Dubai, experts said.
Recruitment has reached a record high, a recent industry analysis by Executive Search Market Reports states.
More than 3,000 new brokers joined the industry in the third quarter of this year, taking the total number of active agents to about 40,000, and 7,900 registered brokerages.
A 70 per cent annual increase has been fuelled by a booming property market, and a fast-growing population. After 20 years of operating in Dubai, Louise Heatley said the current competitive nature was unprecedented.
Executive Links Real Estate
“We've seen a huge increase of interest, possibly driven by Netflix and property TV shows,” said Ms Heatley, who is managing director of Executive Links Real Estate.
“Agencies are putting a lot of stats out there that show the potential success, and the promise of Dh100,0000 plus a month.
“A lot of the recruitment is targeting the UK, and they’re selling the dream, so people are packing up their bags and moving to Dubai.
“People think they're going to be earning within one to two months, but it can take up to six months, and they often don't have the financial stability to survive. In Dubai, if you're not bringing in money, savings don’t last very long.”
How are estate agents paid in Dubai?
Estate agents in Dubai tend to be paid entirely on commission, meaning that earnings are driven by the size of the deal, the number of sales and the split in commission earned.
Fixed salaries in this industry are uncommon, meaning it is a high-risk profession despite the potential for high returns.
Typically, larger agencies can provide a steady stream of leads but pay lower commissions of about 40 per cent to deliver moderate, but consistent, take-home income.
Smaller agencies may offer higher incentives, but have fewer properties to sell, while off-plan specialists and luxury brokers can offer higher commissions and fewer, but larger transactions.
Revolving door of staff turnover
The highest turnover occurs among new agents and those managing rentals, with the average stay just three months, according to the market report.
Companies investing in training and mentorship programmes were most likely to retain staff. The UK real estate market is one of the most popular to be plundered by recruitment companies, Ms Heatley said.
“There has been a huge increase in UK investors looking to buy in the UAE,” she said. “We've seen the ups and downs before, and excessive recruitment, but nothing like this.
“Let's face it, it's not hard to get a real estate job. If anybody wanted to they could get hired, it doesn't need qualifications or experience.
“People are hiring anybody, but it’s trying to find the diamond in the rough that's the challenge.”
Sky-high commissions out of reach
So far this year, brokers have earned about Dh3.2 billion in commissions, but the average is Dh18,000 a month, per agent.
Briton Laura Goldman has been working in real estate since arriving in the UAE three years ago and leaving a UK sales job.
“I wasn't educated at university so my skills are limited,” she said. “I’m a salesperson, that's all I've ever been but I'm a quick learner and very much a people person.
“I like to network and to be around people. It did take me a year to figure out exactly what I wanted to do when I came here.
“I'm about to do the biggest transaction of my career at the trustee office, and that's only really after being in the property market for two years or so. It's a significant deal and a life-changing amount of money that I'm going to earn out of it.”
Another recent recruit is Andrew Tweedie, a UK law graduate who moved from Leeds to Dubai in September.
“Initially, I was due to start at another real estate company,” he said. “Their recruiter and sales manager painted an idea in my mind of what the training would be like.
“But they only shone a light on the positive side of Dubai real estate, making big deals, driving flashy cars and earning loads of money.
“They weren't really offering much training. I was shown a database of properties, and I was just making calls. It’s obviously quite a difficult thing to do when you've got no experience in the field.”
Mr Tweedie, 22, joined another company after just a week or so and is now getting to grips with UAE real estate. He said his savings should sustain him for 12 months or so, but hopes to be earning as soon as possible, as he is living with a friend’s family to ease his costs.
Reality check
Asad Khan, chief executive of Invest Dubai real estate, said new brokers should be aware of the challenges ahead.
“It is getting a lot more competitive, and more brokers are fighting for the same business. It has become more cut-throat, more ruthless,” he said.
“The brokers who add value to a client, they're the ones who can close. I'm currently closing a big deal at Dh300 million.
“The brokers that are of value will always hold their own position. People coming into the Dubai market thinking they’re going to become a millionaire overnight, but find out very quickly they don't have the knowledge on the ground and don't know Dubai's property cycle.”
