September 7, 2009

Property auctions in the UAE will become more popular over the coming months as the real estate industry looks for new ways to boost flagging sales, a new report published on Monday predicted.

The Harbor Report, a publication on news and trends in the local real estate industry, said the increased transparency and regulation of an auction would be advantageous during the current sector crisis.

The report findings, published by Harbor Real Estate, added that as Dubai's property market matures, it will see an increased number of auctions, similar to other markets around the world.

Dubai's real estate industry has been rocked since the onslaught of the global economic crisis last year and prices in some parts of the emirates are down more than 50 percent on their 2008 peaks.

"This is not likely to replace the traditional ways of selling, but will rather enhance selling operations and give the buyers in this country more options,” said Mohanad Al Wadiya, managing director of Harbor Real Estate Brokerage.

The Harbor Report predicted that the industry will see a shift towards auctions as more and more sellers compete for a sale and struggle to find buyers.

Whereas Dubai was previously a seller’s market due to the high number of off-plan property sales, in the post-recession environment it is the buyers that now have significant market influence, it added.  

“The primary advantage of an auction is that it is competitive, well regulated, fair and transparent. In addition, properties that are auctioned are usually purchased at a price that reflects the current market value," said Al Wadiya.

"This is due to the competitive bidding process and the fact that the buyers determine the purchase price.  If the auction system is well regulated and administered, buyers know they are competing fairly and on the same terms as all other buyers."

Property auctions are organised so that the person who offers the highest bid on the property wins the right to buy it.  

To take part in the auction, interested individuals must register beforehand and to ensure that all bidders are fully briefed about the properties for sale, tours will be arranged at select properties for all registered individuals.

Source: Arabian Business