Why was UAE’s first property auction a flop?
Dubai’s first property auction fared worse than it expected. The market needs to step up its drive to attract investors.
May 27, 2009 3:40 by Parinaaz Navdar
None of the four properties up for bidding made their reserve price at Dubai’s first property auction held by Madania Real Estate, on Tuesday, reports Zawya.
A villa in Arabian Ranches sold for AED2 million, and another in Al Mahra, also at Arabian Ranches, sold for 3.5 million. Both properties, however, did not meet the sellers’ reserve price; sale will be complete only if the owners agree to lower their valuations. The two other properties at the auction – a penthouse in Jumeirah Beach Residences, and another villa in Al Mahra – did not attract any bids from the crowd. Successful bidders were required to pay a 20 percent deposit and a two percent Land Department fee on the property.
“The auctioneering method of sale is unique in that it facilitates sales between a buyer and vendor in the most transparent manner and puts the property before the price,” said Raymond Kuceli, CEO of Madania, prior to the auction.
Of the 100 people at the auction, however, only nine had registered in advance to bid; the rest of the crowd consisted of 35 journalists and 56 estate agents who were there to gauge the willingness of the people to buy, according to Arabian Business.
Madania have said that despite the failure of the auction, they still plan to continue holding monthly auctions in Dubai, hoping that the city will warm to the idea.
Madania is not the first company to try unconventional methods to stimulate demand in the UAE since the financial crisis. Many real estate companies have extended payment schedules in order to lure potential buyers.
Dubai has suffered the world’s biggest real estate reversal according to a report by property broker Knight Frank, which says property prices in the city have fallen by 32 percent in 12 months, compared to the price rise of 48 percent in the previous year.