In Dubai, property auctions offer significant markdowns to market rates
Dubai: Investors scouting for the best deals in Dubai’s property market should keep an eye on the auction market too, with one recent listing for a four-bedroom villa on the Palm Jumeirah set at Dh18 million. The pricing represents a significant discount to what a similar property on the Palm would be fetching outside of an auction, which would be in the range of Dh20 million to Dh25 million depending on the location.
Palm Jumeirah continues to be the best-performing location within the wider Dubai real estate, and has in the year-to-date turned in another high double-digit growth in value. The location continues to score in notching up record deals on existing and offplan property, and by all indications, appears set for another round of heavy transactions during peak summer.
The auctioned villa – on Frond M and part of the ‘Garden Home’ series – is more than 6,000 square feet.
And it’s not just completed homes that are being put on sale – or to gauge levels of interest – on Emirates Auction. There is an ‘under-construction’ villa on the World islands, also for Dh18 million. A more recent entry on the auction site is for a 53,820 square feet plot on ‘Dubai Islands’ (the Nakheel master-development that was formerly known as Deira Islands. The project is up for a major makeover and re-development as demand for waterfront properties and hospitality options in Dubai escalate.)
The base price for the plot has been set at Dh23 million.
More properties are hitting the auction trail as banks and courts try to get the best possible deals from selling them off. These are typically properties that have been foreclosed because the original buyer has had difficulty meeting the payment commitments to the banks. Or the property might have featured in a dispute and the courts issued a verdict to sell it.
“Whatever be the case, there are more property auction listings happening in Dubai now,” said Sameer Lakhani, Managing Director at Global Capital Partners. “The best part is the base prices when they come up for auction represent a sizeable discount to current market rates.
“Investors do have an opportunity to cash in.”
Sell on the upside
The strategy of banks in going for the auction is clear. There is no time like the present to recoup their exposure in property, especially a luxury home. Demand for upscale homes in Dubai remains at a peak, with market sources talking about summer offering a few more big hits on deal prices.
So, when a ready home on the Palm is placed for auction, the prospects are, to say the least, good enough.
The best part of the properties showing up for auction is they come with no liabilities for the new investor. “It’s minus any payment or other obligations that the previous owner may have with the bank,” said a consultant. “But if there are any on-property issues – paint peeling, chipped off door –those will need to be met by the new buyer.
“In many cases, these auctioned properties come with running lease contracts, and that too represents an income for the owner.”