Systematic decline in marketing spending for real estate projects


The economic impact of the slump in real estate market on brokers is dramatic and results in systematic decline in marketing spending, not only for new projects, but also for already developed ones.

In general, property business depends on the income of real estate brokers. Brokers who are investing in high-visibility, high-impact marketing tools are among the high-earners. Over the past two years, the scale of real estate business has dropped dramatically and rapidly. Commission income decreased. High-earning agents are now examples from the past.

The trends in commission income are pretty clear, when we estimate the average  decreased property price and total number of transactions in 2009 and 2010. Commission income peaked during the years of property boom in Dubai, but dropped like a stone since the start of the recession. About 6 years of commission growth was lost in the 24-month period.

Commission income is expected to remain roughly flat in 2010, as the property prices and rental values are almost at the bottom of the decline. The good news for top earners is that there are now fewer brokers competing for the commission dirhams, and that consumers are likely to gravitate to brokers who have reliable track records and are clearly in the business full-time. How many real estate  companies is that? The number of high-earning brokers in Dubai has declined by at least 80% from the peak of the real estate market. This is an incredible loss of earning power. The drop in commission revenue  naturally results in a drop in marketing spend. The number of  real estate companies that can still spend on marketing and advertising has declined proportionally to the decline in property prices.

Now is the opportunity for higher-earning brokers and agents to increase their investment in marketing and advertisement in order to increase their share of the market.

However, the contraction in marketing spending  over the past two years is difficult to process, as it is so large and destructive to estimate.


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