Dubai Real Estate Commission Explained: Standard Rates, VAT Treatment, Who Pays, and What Investors Should Confirm Before Signing
Why commission transparency matters in Dubai property deals
Dubai real estate transactions move fast, with buyers, sellers, landlords, tenants, and lenders relying on clear documentation to prevent delays. Commission is one of the costs that can change the economics of a deal when it is not agreed in writing early. Clarity reduces friction at offer stage, supports realistic budgeting, and protects timelines for valuation, mortgage approval, and transfer. Commission is part of the broader transaction cost stack that investors model when comparing net yields across districts such as Dubai Marina and Downtown Dubai, where price points raise the absolute value of brokerage fees.
Commission discussions are not only relevant for end users. Investors focused on portfolio performance track all cash outflows at acquisition and leasing, including brokerage fees, VAT on services, and recurring operating costs. An investor comparing rental strategies in Business Bay versus lifestyle-led demand in Palm Jumeirah benefits from a predictable fee framework that can be stress-tested across occupancy and renewal cycles.
How commissions are set in Dubai: agreement first, market custom second
Dubai’s brokerage framework is anchored in the principle that the broker’s fee is set by agreement between the parties. Where the agreement does not specify a fee, prevailing market custom is used. This approach places emphasis on contract drafting and the specific broker forms used during a transaction. Investors should treat commission as a contractual term that must be visible in signed documents, rather than a verbal understanding, since deal teams can change during negotiation and transfer stages.
Transparency expectations extend to broker licensing and ethical practice. Regulatory oversight sits under the Dubai Land Department and its regulatory arm, with market systems designed to protect parties through documented terms. In practical terms, the investor’s job is to confirm the commission rate, the payer, the VAT treatment, and the payment timing before any reservation, memorandum, or offer acceptance becomes binding.
Typical benchmark rates for residential sales and rentals
RERA does not publish a fixed commission schedule for every scenario, yet the market operates around widely used benchmarks. Residential resale transactions commonly reference a commission around 2% of the purchase price. Rental transactions commonly reference 5% of the annual rent, with many agencies applying a minimum fee threshold in AED for smaller leases. These figures are best treated as starting points for budgeting and negotiation, not as guaranteed rates.
Market conditions influence negotiation. In high-liquidity cycles, agents may hold firmer pricing for complex deals that require intensive viewings, buyer qualification, and documentation support. In price-sensitive segments, brokerage firms may compete on fee transparency and speed of execution. Investors comparing buy-to-let options in Jumeirah Village Circle often focus on total entry costs and tenant churn risk, making early confirmation of the commission structure a practical step in underwriting.
Commercial property commissions and lease structures
Commercial transactions follow broader ranges, shaped by asset type, tenancy profile, and lease duration. Sales brokerage can be priced higher than standard residential benchmarks for deals involving complex due diligence, tenant covenant review, and investment structuring. Commercial leasing may be priced as a percentage of annual rent, with ranges that vary by asset class, fit-out terms, and broker scope. Investors should request itemised terms that separate brokerage fees, any marketing charges, and any advisory fees billed by specialist firms.
Commercial leasing brings VAT considerations into focus, since commercial leases and many commercial services are treated differently from long-term residential leasing for VAT purposes. A clear invoice trail protects buyers and tenants, supports audit readiness, and reduces disputes during renewal or assignment.
VAT on brokerage services: what parties should expect to see on invoices
VAT in the UAE applies to many real estate-related services, including brokerage, consultancy, and management services. Brokerage commission is a service fee, so VAT is typically charged on the value of that service. Investors should confirm whether the quoted commission is VAT inclusive or VAT exclusive and request a tax invoice where applicable. This detail affects cash flow at transfer and at lease signing, especially for higher-value transactions in prime districts and in commercial assets.
VAT treatment on the property itself varies by residential versus commercial supply rules. That distinction can cause confusion when parties assume VAT exemptions on rent imply VAT exemptions on brokerage services. The safer approach is to treat brokerage as a separate service line that requires explicit VAT clarification.
Who pays commission: buyer, seller, tenant, landlord, or developer
Commission responsibility depends on the deal structure and the written agreement. In many residential resale transactions, buyers pay the brokerage commission. Some sellers choose to pay, especially where an exclusive listing agreement and marketing commitment are in place. Rental commissions are commonly paid by tenants, with corporate lease negotiations sometimes shifting part of the fee to the landlord based on lease size and tenure. The contract should state the payer, the fee amount, and the payment trigger in a single unambiguous clause.
Investors should view commission payer decisions as part of negotiation strategy. A seller-paid commission can broaden buyer reach and reduce friction for mortgage buyers. A tenant-paid commission can influence rental affordability in competitive leasing corridors. The key is written clarity, since implied assumptions can break deals late in the process.
Off-plan commissions: developer-paid model and why it matters for investors
Off-plan transactions often operate on a developer-paid commission model, where buyers do not pay the brokerage fee directly and the developer compensates the broker. Commission levels can be higher in off-plan campaigns due to sales targets, inventory velocity goals, and launch-phase marketing intensity. Investors should still confirm that there is no hidden brokerage fee being charged to the buyer side through separate invoicing or bundled charges.
Off-plan examples across different positioning models include Breez by Danube linked to Danube, lifestyle inventory such as Peace Lagoons linked to Peace Homes Group, design-forward towers such as Twilight by Binghatti linked to Binghatti, master community product such as Sobha Elwood linked to Sobha Group, and amenity-led residential concepts such as Samana Resorts linked to Samana.
Commission splits inside brokerages: agent versus agency
Commission collected on a transaction is typically split between the individual agent and the brokerage firm under an internal agreement. This split can vary by seniority, lead source, performance, and whether the agent is salaried or commission-only. Investors do not need the internal split to close a deal, yet the existence of a structured brokerage model often correlates with better reporting discipline, clearer invoicing, and stronger handover support.
Brokerage quality matters in high-volume markets where multiple parties coordinate bank approvals, NOC processes, and transfer scheduling. For investors building exposure across districts, consistent brokerage operations reduce the probability of late-stage documentation errors.
Where commission sits in Dubai’s wider market landscape
Commission planning becomes more material as transaction values rise, which is why prime markets draw extra scrutiny. District choice influences both pricing and liquidity, so investors often model commission alongside expected holding costs in locations such as Dubai Hills Estate and lifestyle corridors that include Creek Beach and growth areas such as Dubailand. Developer track record shapes transaction confidence and resale appeal, with established names such as Emaar, DAMAC, Sobha Realty, Nakheel, Meraas, and Select Group frequently appearing in core investor shortlists.
Investor diligence should confirm brokerage licensing, fee payer, VAT status, and payment timing before signing. Deal documentation should reflect the agreed rate in writing, with invoices aligned to the final contract terms. These steps reduce surprises and protect timelines from offer acceptance through transfer, registration, or lease activation.
Work with Aurantius Real Estate for fee clarity and transaction execution
Aurantius Real Estate supports buyers, sellers, landlords, and investors with transparent guidance on Dubai transaction costs, commission expectations, and documentation flows across resale, rental, and off-plan strategies. Aurantius Real Estate provides structured support from pricing and negotiation through paperwork coordination and handover, aligned with professional standards and investor-grade execution.
