Four big-ticket properties go unsold in Dubai; experts say sellers and buyers still have widely varying expectations on price.
Faith in property market a tough sell
DUBAI // Four multimillion-dirham properties in Dubai that went under the hammer this week failed to sell, providing further evidence that the UAE's appetite for new homes is still subdued. Only nine people registered to take part in Tuesday night's auction for three villas in Arabian Ranches and a penthouse in Jumeirah Beach Residences. Of those, only three actually entered bids, all of which failed to meet the properties' reserve prices.
The public auction at Al Murooj Rotana Hotel was a first for Madania Real Estate and attracted a crowd of more than 100 people. However, most were there not to pick up the keys to a new home, but to gauge the health of the market. Raymond Kuceli, Madania's chief executive and the event's auctioneer, said: "The buyers' expectations and the sellers' expectations had too big a gap, but we are really positive about the future.
"There is a perception that if a property is being sold at auction it must be a distress sale, but that isn't the case." He added: "None of the sellers were in a position where they needed to sell quickly, and they wanted to hold out for a price that is more in line with their needs." Information about registrants or people who had arranged to see the properties beforehand will be used to try to generate a sale privately.
Although this is not the first auction in Dubai, they have not been a regular part of the market. Madania plans to hold an auction about once a month, and Mr Kuceli said after several months of dire straits for the property market in the wake of the economic downturn, people were starting to show interest in buying and selling again. "The auction showed that there are people out there looking for bargains - even if sales have not fully recovered yet, there is an interest," he said. "I'm not an economist and I don't know long the market will take to recover, but it is definitely better than it was four or five months ago.
"We see Dubai as a maturing market, and auctions will evolve into the market indicator they have the potential to be." Many at the auction said they had come to see whether the auction prices would reflect the real state of the market. Several agents in the crowd said the minimum asking prices on the properties were still far too high. "They are not realistic; if sellers want to be successful, they have to understand where the market really is," said Ali Monajjem, chairman of Caspian Properties.
"At the moment it is still getting worse day by day, and the new rules on residence visas for freehold owners have not helped," Mr Monajjem said. "A few years ago there were a lot of Iranian investors in the Dubai property market, but there are very few now, and the economic problems in Europe mean there are fewer people from there buying as well." But some remained cautiously optimistic. "We have been looking for a house for around six months and thought we would take a chance to see what we could get here and test the water," said Lin Yiyi, who with his wife, Jie, had entered the unsuccessful bid for the Arabian Ranches villa.
"We thought we could get a bit better than market price at auction, but we will just keep looking. Hopefully we will find the right house for us soon." firstname.lastname@example.org