In the volatile world of Dubai property, new selling methods are being tried out as more traditional tactics are no longer working. One of the most successful new approaches appears to be the auction, which is steadily garnering more support. Angela Giuffrida reports Selling a property in Dubai was never a problem in the boom years when a queue of enthusiastic buyers was just a phone call away and eager estate agents left their calling cards under every available door.
But the dramatic decline in prices since the market peaked last autumn has ushered in a different approach for people who have been unable to offload their villas and apartments the traditional way; through a broker. Auctions, more usually associated with the antique and second-hand car market, may soon become established as a credible alternative for people who want to sell their properties quickly.
However, that could require sellers to be more realistic about the reserve prices they put on their properties, as the results of the past three auctions held in Dubai confirm. None resulted in a sale because bids failed to match the reserve price. Madania Real Estate, which held two of the recent auctions, managed to conclude the sale of a villa in The Meadows through successful negotiations between its owner and the highest bidder after the auction.
"I believe the process works and is the most transparent way of selling property, and the best way to be able to assist sellers and buyers together," says Raymond Kucelli, the chief executive of Madania. Smith and Ken, another broker, started a "swap shop" scheme late last year, where those struggling to sell can exchange their home with someone looking to downsize or upgrade their property. "They simply swap villas, with cash going either way. It's such a simple concept, but it seems to be picking up quite well," says Gregory Antioch, a senior sales negotiator at Smith and Ken.
The company is also attracting more sellers to its "rent to own" scheme. Through the service, sellers can rent their property to a potential buyer for a certain period of time, with the possibility of selling it at the end. Some home owners are considering even more unusual methods of attracting buyers. Steve and Arti Halligan decided to sell their four-bedroom apartment in The Green Community just before the market took a turn for the worse last October, stripping its value by almost half.
They had planned to return to the UK after 18 years in Dubai and needed to release the equity from the home to make the move possible. But buyers were scarce, with the apartment attracting just a handful of viewers. "We put it on the market in September, just as everything started going horribly wrong," says Mr Halligan. Rather than sell the apartment at a loss, the couple has sought the help of Humraz.com, a reverse auction website set up in the UK that is offering a revolutionary way to sell property. If the auction is successful, their home could be snapped up for as little as US$50 (Dh183).
The reverse auction works by charging between $50 and $100 for a bidder to have a "seat" and participate, depending at what stage of the process they register. When enough bidders have registered to cover the property's value, transfer fee, commission for the website and a charitable donation, the auction begins. But the Halligans need to attract 10,000 bidders before this can happen. Bids can range between Dh6 and Dh151,000.
Unlike a traditional auction, the home will be won by the person who bids the lowest, not the highest, with the catch being they have to choose a figure that has not been chosen by anyone else. A number of struggling sellers in the UK and Ireland have used the site but this is the first home in the UAE to be registered on it. Each bidder has 100 chances to make the lowest unique bid but regardless of the price the winner chooses, the cost of the seat is all they pay.
The Halligans hope to sell the property for what it was worth at its peak in the middle of last year, which was as much as Dh3.8 million. For them, they have nothing to lose. If the property fails to attract enough bidders, it is taken off the site. If it does, and it gets sold, then the Halligans get their offer price, while the new owner gets the apartment for next to nothing. There are currently four properties on the site, but as they are still trying to attract enough bidders, the auctions are yet to begin.
Many property consultants remain sceptical that such an unorthodox approach to selling property will endure. "You might get the odd sale happening through auctions but people are just not that into it and just want to sell their property in the normal way, whether through their own contacts or through agents," says Ronald Hinchey, a partner at Cluttons. "Swap-shops are also quite complicated and very time consuming. Trying to get people to match-up to their specific requirements is difficult."
Iseeb Rehman, a director at Sherwoods, which also held an auction in June to gauge sentiment, says market fundamentals will ultimately determine whether such approaches prove successful. "One tries every different mechanism to sell. But what we're realising is that people will buy when they're ready to buy. We just have to sit tight and wait for the market to return to normal." @Email:firstname.lastname@example.org