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SATELLITE CHANNELS CHALLENGE BROKERS
BY AMENA BAKR
Every summer, scores of Gulf Arabs arrive in Cairo with their families to escape the scorching heat of the Arabian peninisula. Their first order of duty, if they haven’t already pre-arranged it, is to find accommodation. So, with their families inside and suitcases strapped to the roof, they head straight from the airport in cars and Peugeot 504 taxis to cruise the streets in search of furnished flats for rent. And the simsars (traditional flat agents) are there to meet them.
They wait on street corners and operate out of hovels, flagging down potential Arab clients by calling out “Hello, flat?” and “Yes, yes!” to passing cars and cabs. Competition is fierce as the highly territorial real estate agents vie for white-robed Arab clients, whose chequered kiffeyehs signal landlords to hike apartment prices five-fold or more. By July, the Gulf Arab season is in full swing and flats are filling fast. By September, the Arabs have returned home and the simsars are counting their commissions – a good summer can cover their costs through the rest of the year.
It’s one of those systems that has evolved to fill a need. But its days may be numbered as a new wave of real estate satellite channels gives Gulf Arabs, and everyone else, the option of shopping for apartments without so much as leaving their couch. If money is no object, then this might just be the way to go, says Tai Saleh, a freelance real estate agent working from home in Maadi. “The idea of having real estate viewed in this manner is very [convenient] and can save people the trouble of [searching] for hours with regular agents.”
Saudi-owned Osool TV was the first on the scene, setting up shop in Cairo last July to broadcast property listings and original programming via satellite to target audiences throughout the region. The network’s apparent success prompted others to follow, with Akareya TV and El Wasta launching similar channels. “The idea was very new to the Arab world but we were ready to take the risk and make the first introduction,” says Khaled Shabana, Osool TV’s technical director, “Now we have many other channels that have followed our lead.”
Osool is a simple concept. Property owners or landlords that want to advertise their property can contact the network’s Cairo office, which sends a camera crew to shoot both the interior and exterior of their premises. The film is edited into a one-, three- or five-minute ad for broadcast on Osool’s satellite channel, which is carried on NileSat One.
But Shabana admits the upstart satellite channel has faced many challenges, the biggest being that people have been reluctant to use the service. “People are still afraid of using the [service] because it’s new to them,” he says, “but we are working to change that.”
While he confessed that the number of clients that have actually rented or sold property through the channel is still meager, he insists it’s picking up as more people realize the value of the service. “We are offering an alternative way that is more convenient for a lot of people to either rent or buy the house of their dreams,” he says.
The convenience of the service not withstanding, Saleh feels people have not yet flocked to these real estate television channels because of the price of the properties listed. “The prices of the flats and villas viewed on these television channels are absurdly high and the majority of people can’t afford them,” she says.
Shabana, however, counters that the price of advertising property on a specialized satellite channel is very reasonable, especially when compared to other media such as newspapers and magazines. “People have the [preconceived] perception that advertising on television [is expensive] when in fact it is one of the most effective and cost efficient ways [of promoting property],” he argues.
Osool charges around $1 per square meter to advertise property to potential buyers in Egypt and the Gulf. “If you have a 200-square-meter flat, for example, you would pay $200, which is cheaper than most newspaper ads,” he says. He explained that the rate includes the cost of filming, editing and broadcasts aired approximately twice a day over a one-month period. Clients can purchase additional coverage at a discounted rate.
But, Saleh wonders, who can afford to spend more than £E 1,200 per month just to list their property on Osool TV with no guarantee it will be rented or sold? “The ads are too expensive for the average person and that’s why all the property seen on these channels is very expensive,” she says. “When you’re rich you can afford to lose a little bit more time [in selling the property] and money than most.”
Shabana explains that the service is in the best interest of the buyers or tenant because no real estate agent is involved. An interested buyer or tenant simply contacts the channel’s hotline and Osool notifies the owner or landlord – that’s the end of the station’s role. “Unlike real estate agents, we don’t take any kind of commission. We only work to make sure that both the buyer and seller communicate and our role ends there,” he explains.
By contrast, when dealing with a real estate firm or simsar there is usually some kind of commission involved. The market norm, in cases where property is sold, is for the real estate agent to charge a commission of about 2.5 percent from the seller and 1.5 percent from the buyer. In the case of property rental, agents usually charge the equivalent of one-month’s rent from both the landlord and the tenant.
The payment structure creates a conflict of interest for the agent when evaluating a property. “Taking commission from both the buyer and the seller does add conflict to us as brokers,” admits Baher Salama, a freelance broker and real estate consultant. “There is always the question in [the back of] our heads, should we be on the buyer’s or seller’s side?”
In many foreign markets this conflict does not exist. Real estate agents know exactly whose side they are on – that of the owner or landlord. In the US, for example, brokers charge the seller between 4 and 6 percent once the property is sold, while the buyer pays nothing, explains Mohamed Abdalla, president of Coldwell Banker. “This way, the agent doesn’t have to live in the dilemma of which side he’s on.”
The ethical dilemma aside, the majority of brokers working for real estate firms or as freelancers don’t see the new real estate satellite channels as a threat to their business. “No matter how rich you are, you would still want to see the property you’re buying or renting first-hand and not virtually,” says Ahmed Hafez, operations manager of First Real Estate.
Salama agrees. “People are still in the process of accepting the idea of dealing with brokerage firms and not the bawwab (building doorman), so they are still far from comprehending real estate via television,” he says.
Traditionally, the real estate market was dominated by simsars and bawwabs. Building on their knowledge of their neighborhoods, these simsars and bawwabs simply connect the buyers with the sellers for a fee.
Abdalla points out that when Coldwell Banker first entered Egypt in 2002 as the country’s first multinational real estate firm, they were faced with the challenge of changing the habits of dealing with these freelancing real estate agents. “One of the biggest challenges we faced was getting the seller to sign a simple contract stating that once the property is sold through us, he would pay a commission,” he says.
In an effort to encourage more people to sign up with them, Coldwell Banker began publishing a listings magazine as an incentive to those who signed a contract with the firm. If a seller signed with the company, they got an ad in the magazine. “We needed a positive incentive to attract people and this worked very well for us,” Abdalla says.
Other brokers have not been so lucky. Salama confesses that it is often difficult to get clients to sign contracts, and he must either take them on their word or lose potential business. “They [clients] tell me that their word is worth gold and promise to [pay] the commission no matter what,” he says. “In some cases, they don’t.”
Due to the reluctance of clients to sign contracts and the failure of the honor system, brokerage firms collaborated to create the Multiple Listing Service (MLS) system, which works as a shared network among firms that allows for properties registered with one firm to be viewed by the clients of another, provided that the first receives the commission of any sale or rental.
“Since we don’t have exclusive deals with the client that state that he will not offer his property with any other agency, we can’t ensure our rights of receiving commission,” says Abdalla. The primary benefit of MLS is that its allows property to be viewed by a larger number of clients, which increases the likelihood that the agent will succeed in closing the sale and making a commission.
While Osool TV was originally intended as a vehicle for listings by individual property owners, the channel has no restriction on real estate agents that want to submit their own video listings, and at no extra cost. When a buyer or tenant is interested in the property, they contact Osool, which puts them in touch with the respective agent. Major realty firms such as ERA and Trenta are already advertising on the channel.
Coldwell Banker signed an agreement with Osool in 2004 to advertise some of its properties on the channel, but is preparing to pull the plug on the deal when the contract expires this summer. “We [eventually] realized that no fruitful results were achieved through this method of advertising and that’s why we’re ending this deal within the coming month or so,” said Mohmed Banany, marketing director of Coldwell Banker. He explained that due to the channel’s repetitive nature, viewers quickly tune out. “These channels become very boring after a while and viewers simply choose to gloss over these channels without paying much attention,”
But Shabana strongly disagrees, arguing that people by nature tend to watch those channels that carry what they’re interested in. “It’s the same thing with specialized music channels; if you watch them all day you will get bored,” he says. Yet people still tune in.
As a means to attract more viewers and break the monotony of the channel, Osool runs 10- to 15-minute programs that cover everything from interior design to advice on how to buy the right property for your needs. “We will also be introducing several other programs very shortly,” added Shabana, hinting at do-it-yourself home decorating shows.
Shabana says Coldwell Banker’s marketing team became quickly disillusioned and didn’t renew their advertising contract because they expected to see instant results once the ads for their properties aired. “They were just too hasty,” he says. “All they were looking for was a hit-and-run deal and this does not happen.”
He also accuses other big brokerage companies of trying to hijack the content of the channel, by exerting pressure as advertisers. “They [brokerage firms] must put in their minds that they don’t own the channel, therefore can’t expect to find everything about them,” he says.
One thing real estate agents and specialized channels can agree on is that the market needs further development to change the simsar culture, replacing it with professional real estate agents – whether real of virtual. One of the main goals for Osool is to educate the market and make people realize the value of advertising their property through television.
It also plans to broaden its appeal by shifting its revenue generation away from subscription fees and towards advertising and sponsorships. “We plan to have no charge for advertising property on our channel by 2008,” says Shabana, “This is a service channel and our goal is to help people find the property they want without charging them,” he explains. This plan does leave several unanswered questions regarding the prioritization and selection criteria based on which properties are accepted for advertising versus those that are rejected.
Banany argues that over the past decade new forms of real estate marketing have given the traditional simsar a run for his money. He says this is slowly eliminating the negative image many foreigners and Arabs have after years of dealing with these traditional real estate agents. “Many foreigners were ripped off and tricked by these agents, who were not thinking about long-term [reputation],” he says. He adds that Coldwell Banker, as well as many other real estate brokers, are doing their best to restore that image and build back the trust and confidence that have been lost over the years. “Arabs are very suspicious today for any of the prices that we present them because they have been cheated so many times,” he regrets.
Gamal Abdallah, a simsar for over 20 years, disagrees with this accusation. On the contrary, he insists, simsars have an excellent reputation with foreigners. “When you work in the market for this long, you come to know the needs of each customer and over the years, foreigners have gained a lot of trust in us,” he says.
And there is no doubt that simsars still play and will continue to play an integral part in the market. “We don’t want to eliminate individual brokers from the market because they do cover areas that we don’t, but we just want to educate them and establish a code of ethics,” says Banany.
For the time being, while brokerage firms and real estate television stations are in the process of maturing, the floor is still very much open for the bawwab and simsar to dominate the majority of the market’s activities. “This is a virgin market, but I believe that it is developing fast and we are already seeing a very positive response from the public on the service we provide,” says Banany.
As for the prospects of real estate television, many in the field doubt its success. “Watching a television channel will never be the way for anyone to buy or rent property,” insists Saleh. “You can only use it as a [barometer] to see what’s out there and how prices are.”
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