A first-ever public auction of residential properties in Dubai, seen as a barometer of the emirate’s property market, exposed a widening gulf between the expectations of the sellers and buyers. The four properties that went under the hammer this week failed to find any takers. Only one of the properties saw any bidding action. Another property received a single bid, but the auctioneer considered it too low. A seven-bedroom villa in Arabian Ranches and a 6,500 sq ft penthouse in Jumeirah Beach Residences received no bids at all. The failure of the event raised a larger question about the efficacy of using an auction as a method to sell properties, especially during these difficult times. Bidders came expecting to snap up properties on the cheap, but the sellers, who, according to organizers, are under no duress, were hoping for better valuations than the market price. As expected, the property auction drew more observers than bidders. Only nine people out of more than 100 who turned up actually registered to bid, with South Asians comprising the majority of the bidders. However, only three of these registered bidders were bold enough to raise their paddle to bid. Most of the onlookers were from the real estate industry itself, having gathered to gauge the mood.
The first property on the block, a three-bedroom villa in the Palmera 3 neighborhood of Arabian Ranches, received three bids. A young couple from China looking for their first home opened the bidding with Dh2 million, and a South Asian businessman quickly countered with an offer of Dh2.2 million. It took a long while for the auctioneer, Raymong Kuceli, Chief Executive Officer of Madania Real Estate, to coax the couple to raise their bid to Dh2.3 million. In the end, the South Asian businessman withdrew, and the couple chose not to raise their bid. The auctioneer called off the bidding, as the price did not meet the unannounced reserve price. The next property to go under the hammer was a villa with five bedrooms plus a study in the Al Mahra block at Arabian Ranches. It received an opening bid of Dh2.8 million, and none of the other eight bidders showed any interest. That auction too was cancelled. “Caution seems to be the word of the day,” said Siju Mathew, a real estate analyst at Al-Futtaim HC securities. “People are not sure whether prices will further go down from here. It seems everyone is having a wait-and-see approach.
The Chinese couple did not go beyond Dh780 sq ft even though the market price for similar properties is closer to Dh1,000. Another real estate broker, who wished to remain anonymous, praised Madania for introducing auction as a new marketing avenue for sellers. “The attendance was alright, but all the four properties were in the same range,” this broker said. “There was no variety. People are looking for studios and one-bedrooms. An upcoming auction of more than 50 properties by property brokerage Sherwoods on June 4 will test that hypothesis. However, Madania’s auction on Monday also proved that buyers are in no mood to distinguish between distressed and non-distressed properties. Every property in the market is now deemed distressed. When asked why he and his wife did not raise their bid to buy their dream home, the husband of the Chinese couple, Yiyi Lin, said: “I think that is the market price.
