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Property Auctions Still Seeking Traction

DUBAI — More UAE properties will be sold through auctions in the coming months as sellers struggle to find buyers, according to a real estate
brokerage firm.

Dubai-based Harbor Real Estate expects property auctions to gather pace as “more and more sellers compete for a sale and struggle to find buyers.” According to its Managing Director Mohanad Al Wadiya auctions are more efficient way to conclude a sale as it will eliminate lengthy negotiation and transaction periods. “The primary advantage of an auction is that it is competitive, well regulated, fair and 
transparent,” he said.

While property auctions are a common feature in mature and developed markets, it is relatively a new phenomenon in Dubai.

So far, there have been three property auctions since June of this year, but none of them registered any sale. Madania Real Estate, the first brokerage to hold property auctions, has so far held two auctions and another property company called Sherwoods 
has hosted one.

Although auctions are one of the most transparent way of discovering prices, high expectations from sellers amid bottom fishing buyers has been the stumbling block for it to succeed.

In a recent auction by Madania, a four-bedroom villa in Meadows was bid up to Dh3.35 million, well below the reserve price. However, the firm sold the same property for Dh4.2 million using the traditional way of negotiations to a buyer from India, who did not participate in the auction.

In its first auction, Sherwoods had to reduce the number of properties on offer from 50 to 20 as sellers withdrew from auction disagreeing with the company’s recommended reserve price. Moreover, majority of home buyers are still waiting on the sidelines hoping for cheaper mortgage plans.

This has shrunk the bidders pool to a very limited set of people with cash on hand floating around for bargains. Madania’s auction in July had five registered bidders compared to nine in its first auction in May.

With conventional auctions flopping, a British reverse auction web site, humraz.com is trying to sell a four-bedroom apartment in the Green Community for just £50 (Dh300).

In so-called reverse auctions, the lowest unique bidder wins. But even this type of auction has yet to attractenough participants ready to part with a few hundred dirhams for a million dollar home. 


aruna@khaleejtimes.com