Realtors demand an administrative calculator for the price of the property..and not to exaggerate the promotional spending

Realtors reported that the local real estate market has recently witnessed a rise in promotional spending, with the aim of selling real estate projects, especially “on-plan”, noting that most of the ads are focused on social media influencers.

Realtors told Emirates Today that it is possible to transfer the budget of these advertisements to serve the final investor, through discounts on the final product, pointing out that it is not acceptable to charge the price of the property to the marketing budget.

They suggested that there be an administrative calculator for the price of the property, similar to the calculator that determines the rental value of the property according to specific factors, stressing that most real estate developers have realized that the price of the property must be studied in a manner commensurate with the potential of the property, the expected rent, and the market situation.

They added that the elements of the real estate price equation are the same for all developers, and they are the main inputs for determining the price of the property, and it consists of the costs of land and construction, as well as administrative and operational costs, and the profit margin.

Real estate price equation

In detail, Walid Al-Zarouni, Chairman of the Board of Directors of W Capital Real Estate Brokerage, said that it is unacceptable to increase the price of the property, just for the real estate developer to spend on the marketing campaign and commercial advertisements, or to use social media celebrities, stressing that the investor or buyer, is the first. By obtaining these amounts in the form of discounts, or a special price for the real estate unit, instead of spending that does not benefit.

Al-Zarouni continued: "If the investor benefits from his real estate investment, he will continue to pump his liquidity into the sector, but if his investments are affected and the investment is futile, he will look for other sectors to invest in."

He pointed out that when demand recovers, we see a noticeable improvement in prices, noting that during the past year, many real estate development companies tended to stimulate demand, and preserve their real estate shares, by reducing their profit margins by rates that reached 70% in some companies.

He explained that since the end of the year 2020, prices began to move up, thanks to the great demand in the market, especially in the villas sector, indicating that the elements of the real estate price equation are the same for all developers, and they are the main inputs to determine the price of the property, which is made up in total of the costs of each of the land, and construction, as well as administrative and operational costs, and profit margin.

Property Price Calculator

For his part, the head of the Marketing Department at Aras Real Estate Group, Alaa Masoud, said that there is an exaggeration in real estate prices in the market, due to the exaggeration of some real estate developers in raising the value of the property, after charging the marketing budget and brokers' commission.

Masoud stressed the need to review prices on the basis, constants and studies from the Department of Property and Land, or the authority that oversees this issue, pointing out that there is a rental calculator in Dubai, and no one can raise the rental value except through it, and in return, there must be an administrative price calculator The property, according to the area and location.

exaggerated prices

In the same context, real estate consultant Mohammed Al-Hafiti said that some real estate developers exaggerate the prices compared to the cost, while some of them have recently had reasonable prices, and consider the investor as a partner.

He stressed that the market is demand and supply, and is witnessing an increasing demand, while the supply is still limited in the categories of “townhouses” and villas, and the demand for them is high, for several reasons, including the Corona virus “Covid 19” pandemic, and different lifestyles, in addition to that some developers themselves offered Real estate units are overpriced.

In addition, the CEO of Al-Andalus Courtyard Real Estate Development Company, Saleh Tabakh, said that it is possible to calculate the estimated cost of any real estate project, with a not large discrepancy between projects, and it varies according to the project, whether it is average luxury or luxurious with special specifications.

He added that the basic cost is in the price of the land, the value of which varies according to its location and features, pointing out that a large number of real estate developers, when studying real estate feasibility, rely heavily on self-financing of the project, by selling real estate units under construction on the map, which provides A large part of the value of the construction of the project, through the payments of buyers.

Tabakh continued: "Determining the real price is due to the factors of construction quality and the location of the project, not to the amount of marketing expenses."

He stressed that most real estate developers realized that the price of the property should be studied in a way that is commensurate with the capabilities of the property, the expected rent, and the market situation, stressing that the exaggeration in the price of the property negatively affects the rental return, and makes the real estate financing process and resale in the future difficult.

Tabakh cautioned that real estate developers should abide by the promises made during marketing campaigns, and not be exaggerated, calling on the Land Department to emphasize marketing controls and marketing promises to developers, by monitoring the market, so that the quality of projects is not affected when competition increases, due to prices.

In addition, the real estate expert, Muhammad Al Ali, said that there is no great exaggeration by the real estate developer in profits compared to the cost, pointing to the effort made by the developer in construction and finishes.

Al Ali explained that the situation in Dubai does not allow for a significant increase in prices, as there are many competitors, and the available offers impede raising prices.

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