Wednesday, September 09, 2009

Property auctions still struggling to gain foothold in UAE

Several UAE properties are being sold through auctions, and will continue to be sold that way, during the following months, as the sellers struggle to find buyers, reveals a real estate brokerage firm.

The Dubai-based Harbor Real Estate reveals that with the property auctions gathering pace, several sellers are competing for sale and are struggling to find buyers.

The Managing Director of the company, Mohanad Al wadiya, says that auctions are a more efficient way of making 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 adds.

Although property auctions are a common feature in developed markets, it is comparatively a new trend in Dubai. So far are only three property auctions being done since June this year, although none of them registered a sale.

The first brokerage firm to hold property auctions was the Madania with two auctions done so far, and another property company called Sherwoods, has hosted one. High expectations from sellers and bottom fishing buyers have been the stumbling block for its success.

In a recent auction by Madania, a four bedroom villa in Meadows was bid forDh.3.35mn well below the reserve price. However, the firm sold the same for Dh.4.2mn using the traditional way of negotiation to a buyer from India, who did not participate in the auction.

Meanwhile, Sherwoods, in its first auction, had to reduce the number of properties on offer from 50 to 20, as the sellers began to withdraw from the auction, dis-agreeing the price recommended by the company.

This has led to lesser numbers of bidders, with cash on hand floating around for bargains. With conventional auctions flopping, a British reverse auction website, humraaz.com, is trying to sell a four-bedroom apartment in the Green Community for just Dh.300.

In these reverse auctions, the lowest unique bidder wins. However, even this type of auction is yet to attract sufficient participants.

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