Abu Dhabi rents tumble, broker commissions up

Commissions for brokers to be paid by tenants could reach Dh7,500

A few years ago, commission paid by new tenants to housing brokers in Abu Dhabi did not exceed Dh2,000. At present, the sum could reach Dh7,500.

Most brokers in the emirates, many of whom are not authorised, have stopped viewing charges to the relief of those who search for housing.

But their relief was shortlived as halting those charges was more than offset by the sharp increase in commission imposed on the tenants.

Tenants acknowledge that housing has become affordable in the emirate following a steep decline in rents over the past two years. But at the same time they are burdened with a much higher commission in the absence of clear laws in the UAE organising rental brokerage and commissioning.

Figures published in the Arabic language daily Emarat Alyoum showed brokers, the majority of whom are Egyptians, now charge between Dh,3000 and Dh5,000 for one-bed room apartments, Dh5,000-6,000 for two bed rooms, more than Dh6,000 for three bed rooms and Dh7,500 for a four-bed room unit.

“This means a tenant who rents one-bed room apartment with a value of Dh4,000 a year has to pay Dh45,000 in the first year,” the paper said.

Brokers defend their charges, saying they only get a fraction of what major investors receive from landlords. They said they play the key role in the renting process as they have to show the unit to the tenants and to persuade them to rent it.

“We are only very little fish compared with the major investors who deal directly with the landlords,” said Mustafa Ahmed, a housing broker in Abu Dhabi.

Tenants believe authorities should intervene and restore discipline in the real estate market in the emirate, which controls just below of the world’s proven oil resources. Some of them want a law setting commission charges while others believe unauthorized brokers must be forced out of the market.

“We need a law to be issued to curb manipulation by the brokers…there are random commissions in the market and many brokers are not qualified while some of them do not even have the proper appearance to be brokers,” said Abdul Fattah Salim, a tenant in the capital.

Tenants also complain that many individual brokers do not have offices as they manage their units by mobile phones.

“Last week I found a flat through a newspaper advertisement and I called the number…it was for a broker who asked me to meet him at a coffee shop….when I met him and asked him about his office, he simply smiled and said I was already sat at his office,” said Ayman Rasheed.

Emarat Alyoum said many brokers had made a fortune through commissions over the past few years as some of them complete an average 15-20 deals a month, with each deal fetching him at least Dh3,000.

“Commission charges are normally set at two per cent of the unit’s value but many brokers who work on their own overcharge the tenants,” said Usama Izzat, a rent manager at a key real estate agency in the capital.

“According to our information, many brokers are not authorized and are involved in this work besides their original job to maximise their income…this is because there are no official inspections or clear laws organising this process.”

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