Homes ready to go under the hammer
The UAE's first open house auction is due to take place next week.
Three villas in the Arabian Ranches and a Jumeirah Beach Residence penthouse will go under the hammer in Dubai on Tuesday as interested parties bid for their dream home. But they will only be sold if the price meets or exceeds the reserve set on the day.
Although it is a method used frequently in the West, this will be the first time such a sale has taken place in the emirate that anyone can attend. But Raymond Kuceli, the CEO of organiser Madania Real Estate, is confident of it being a success.
"There's no market in which auctions don't work because they draw out the true market value of a property," says the man who will hold the gavel (the mallet used to confirm a sale).
Selling at auction might appear to be a risky business, not least because there are no guarantees a house will sell. Buyers, however, often sweat it out because while people show interest it might not make their hoped-for price. This is where the reserve comes in, thus safeguarding against parting with their home for a lower than expected price.
"Selling at auction can be a tense time for owners but setting a reserve provides them with some peace of mind as the property will only be sold for less if they agree. There are no obligations," explains Kuceli, who has personally bought and sold homes this way.
"Otherwise, normal auction rules state that lots go to the highest bidder. If, however, interested parties have their hearts set on a house they can bid in advance which may halt that lot altogether – and there is nothing better for me as an auctioneer to stand on the podium and withdraw a lot."
Placing a reserve also encourages transparency as it has a higher chance of satisfying all parties.
"The reserve might not fit the market value so people won't come but the process of auction is to draw a line in the sand between the buyer and seller and agree on a price," says Kuceli of the event that will take place at the Al Murooj Rotana hotel.
Having said this, he believes now is a good time to either get on or move up the ladder.
"I think we are in the bottom of a curve so it's a good time to buy," he says. "There is usually a three- to five-year turn around process for property and we're in that again but there is some solidness coming back to the market. I've seen some prices move up slightly recently, especially in The Springs where owners are refusing to accept low bids, thus pushing the price up."
The auction was due to take place earlier this month but had to be put back due to delays in registering property titles with the Dubai Land Department.
Buying at auction can be riskier than conventional methods because bidders must ensure all their finances are in place.
Madania stipulates that 20 per cent must be paid once the gavel goes down with the outstanding balance due four weeks later.
This can be where some people encounter difficulties because there are fewer mortgages on the market now than this time last year as a result of the global meltdown. Loans are still to be had, but Kuceli says people should no longer assume they will get a mortgage.
On the plus side, buying at auction can be the ideal way to get a good deal, because people can see their competition and thus place bids based on what others are willing to pay.
"The process is seen as one of the best for everyone involved because they reflect the state of the market on any given day and as such can be seen to be fair to all parties," explains Kuceli.
"We do get properties to exceed their market value but bargains only go to auction if the seller is happy with the reserve price. If the buyer thinks it's a bargain then it's a win-win situation. It's as good a way as any to get on the property ladder."
Kuceli is also quick to dismiss rumours that prices will drop over the summer. There has been much anecdotal talk of people leaving once the school year ends in June and July, but he will forge ahead with his monthly sales plan regardless.
"There are people who want to sell and there are those who have to sell. But that's not a bad position to be in. We'll still have an auction in June, July and August. And if people come to view properties during the summer we know they are keen. I believe strongly in the Dubai market. There is positivity so we just ride it out."
With more than 60 inspections over the past three weeks on the four properties for sale, Kuceli is confident of making sales next week but understands why people may be reluctant to part with their money in such a way.
"Some of the main fears people have are over the reserve price but property is just another product and something that has been around for thousands of years," he says.
"Christie's has them to auction jewellery and often they don't know what price to put a lot on at and this is just the same – it's about getting market value and paying what people think a property is worth."
Kuceli's top tips
- View the property you are interested in and others like it to get a feel of the market value
- Make sure your finances are intact because if your bid is successful you legally own the property
- Decide whether it is best to blow other people out of the water with your first bid or whether you want to increase slowly against other people
- Get any questions you have answered prior to the auction
- When bidding, set your budget and know when to stop
Al Mahra Villa 41
Bedrooms: Five
Bathrooms: Five
Plot size: 7,000sq ft
Built-up area: 4,278sq ft
This villa in the Arabian Ranches' Al Mahra development could be a great investment for somebody as it is currently rented out at Dh280,000 per annum.
With five bedrooms and five bathrooms, it is big enough for a growing family and comes fully furnished on top of built-in wardrobes. There is also off-street covered parking for two cars.
Homes similar to this are on the market for around Dh4.3 million.
Al Mahra Villa 68
Bedrooms: Seven
Bathrooms: Seven
Plot size: 13,093sq ft
Built-up area: 6,519sq ft
This stunning villa is a rare find – not only because it is one of only two of its kind in the Arabian Ranches but its main attraction is the fact it's the only one overlooking the golf course.
Four of the seven bedrooms are en suite. It also has two living areas and a separate dining room.
Outside, the detached property comes with covered parking for three cars, a self-contained maid's room, balcony and landscaped gardens with swimming pool.
Palmera Villa 18
Bedrooms: Three
Bathrooms: Three
Plot size: 4,336sq ft
Built-up area: 2,936sq ft
This villa in the Palmera development of the Arabian Ranches is an ideal family space. On top of the three bedrooms and bathrooms, it also comes with a guest room and a separate maid's room.
Less than one year old, it is in excellent condition and has a large garden as it is occupies a corner plot.
The villa also comes with built-in wardrobes, a balcony and off-street parking for two cars. And thanks to it being detached, residents can enjoy the peace and quiet away from the neighbours. Twenty-four-hour security also helps to ensure safety.
Similar homes are for sale for around Dh4m.
Sadaf penthouse
Bedrooms: Four
Bathrooms: Four
Apartment size: 6,019sq ft
This two-storey penthouse in Jumeirah Beach Residence has spectacular views over the Arabian Gulf from the open-plan living-dining area. There are two terraces – one with plunge pool – on top of four en suite bedrooms. A similar property is for sale for almost Dh15.5m.
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