Drive away with a sound investment
A new investment stream is already reaping rewards for buyers, who have snapped up collectable car number plates as they have gone on sale in Abu Dhabi for the first time.
The concept has taken off so dramatically over the past eight months that the UAE auction house dealing in the plates expects to break its own world record price soon, when the coveted number 1 plate goes under the hammer. The plate will be on show today at the PrivatDrive special cars show at Emirates Palace hotel.
Emirates Auction was formed in 2005 and held its first number plate sale last May. It is the official sales organiser for Abu Dhabi Police and presents the auctions jointly with them. Managing director Abdulla Matar, who will eventually sell all of Abu Dhabi’s top code 5 number plates, said: “These are an investment – all over the world registration numbers are growing in value.”
Matar has presided over five auctions, selling 400 number plates for a total of Dh205 million. But despite this meteoric start to his business he is cautious.
“We are looking to establish a market here. Number plates in the UAE are only numbers, not letters, so we cannot spell names like other countries.
“Instead we sell numbers linked to car makes and two-digit numbers, which can be a date of birth, or an anniversary, and four-digit numbers, which have a special meaning for someone.”
Matar travelled to the United Kingdom, Australia and Hong Kong before setting up the auction house. “We saw how they do auctions in those countries, then came up with a process that will work in the UAE. Each country has its own business culture.”
Matar’s plan is to establish a local auction market for huge-figure items like number plates before launching auctions for car parts, heavy equipment and property.
“We have Christie’s and Bonhams auction houses here but these other markets are missing. We are just getting people used to the auction concept before we do these other things,” he said.
He has already personally benefited from the strengthening market for personalised plates. His Dubai registration number 383 was worth Dh65,000 two years ago – today it is valued at Dh400,000. “It is attractive because it reads the same backwards and forwards, in English and Arabic,” he said.
Businessman Salem bu Harron attended the first and second auctions in Abu Dhabi without buying to see how stable the market was. He said: “I stood and watched. I wanted to watch the market. When I saw the numbers were stable, I thought I will get them.
When I came to the third auction, it was to buy one plate. I bought five instead. If you wait for one year even, these will show a very good profit.”
Harron owns Golden Class Rent-a-Car in Abu Dhabi, but he puts his special number plates on his personal cars. He added: “All numbers are good. This market is changing now, very quickly.”
At the third auction, last year, Harron bought numbers 158, 713, 625, 612 and 99000. He has the 612 plate on his Ferrari Scaglietti 612 – the car cost Dh1.36 million and the plate cost Dh280,000. At the fourth auction he bought 99993, 99996, 91000. At the fifth auction he added 325, 226, 558 and 91111 to his collection.
Then, on January 19 this year, he paid Dh2.61m for the plate 11111. Four days later he was offered Dh300,000 more for it.
“I am afraid to put this plate on my car because too many people know how much it cost and how much it is worth. This is a very good investment.
“When the 11111 plate came for auction I felt it was too much money. One of my friends has the Dubai 11111 plate. He said, ‘Don’t worry, take it’. So I said OK. I cannot sell it for less than Dh3.2m.”
Harron, who obviously now has a good feel for the value of car plates, reckons that the number 1 plate will sell for between Dh50m and Dh60m later this month.
Bidding for the top plate will open at Dh10m on February 16, but Emirates Auction is confident it will pass the Dh25.2m record set last year when plate number 5
Abu Dhabi businessman Talal Khoury, Chief Executive Officer of Al Awael Holding, bought the plate, and spent a further Dh11m on number 7. The money raised went to help road traffic accident victims and people with special needs.
Matar added: “We are talking with Guinness World Records about the sale.”
Guinness World Records spokesman Amarilis Espinoza, speaking from London, UK, told Emirates Business: “We have received a claim from Abu Dhabi but no guidelines have been sent to the organisers so at present I’m not sure if this will be an official attempt.”
However, the auction organisers hope that if the bidding goes to plan the sale of the number 1 plate can be verified as a world record on the spot.
The second top-seller this month is expected to be number 100, and number 1111 will attract huge interest, said Matar. They will be selling 90 number plates in all at the Emirates Palace event.
Other numbers for sale include 32, 41, 51, up to 99199. If you are interested in 1111 and own two cars, number 1112 is for sale as well.
A word of warning for bidders, though. When Ras Al Khaimah’s number 1 plate fetched Dh8m in 2004, nationals were told not to take out bank loans to finance their bidding in case they were unable to cover the interest payments.
Abdulla Al Nowis, a counter services team leader with etisalat, paid Dh102,000 for number plate 99599, the first plate sold at the first Abu Dhabi auction last May. He has since bought 8999 for Dh75,000 and uses it on his Mini Cooper, but he is holding on to both plates rather than looking for buyers.
“For two months I used 99599 on my car,” he said. “But now I just keep it as an investment. I am interested in this idea and I like the fact that the money from the auctions go to charity, it does good things.”
A sure sign that the market for plates is maturing comes from Mohammed bin Massoud, a Dubai businessman, who paid Dh500,000 each for the Dubai and Fujairah 911 plates and Dh1m for the Abu Dhabi 911 – to put on his three Porsche 911s. He plans to collect the 911 plate from all seven emirates, he joked.
Massoud, a former rally driver and mechanical engineering graduate who now deals in real estate, said: “I have about 10 plates and they are, of course, an investment. The market has improved. Now it can be cheaper to buy privately, cheaper than at auction.”
The price in dirhams paid in Abu Dhabi last year for plate number 5
The price at which bidding will open at this month’s Abu Dhabi auction for the number 1 plate
The profit in dirhams one number plate could have made just four days after buying it
The price in dirhams of the UK’s dearest number plate, F1
With number 100, expected to be top sellers next month
Dubai-based independent financial advisor Martin Kinsey says you should be careful and do your research if you are thinking of investing in a number plate.
“There is an air of competition at auctions and that pushes the prices up,” he said. “Also there is a high percentage of wealthy people here in the UAE and this may be a form of investment that suits them more than the ordinary investor.”
Here are a few tips to bear in mind if you want to buy a plate:
-- Like any other investment, the value of your registration number could go down as well as up.
-- In the UAE your number plate may increase in value quickly but it is wise to think long-term to optimise your investment.
-- Do not think of plates as ready cash – depending on how many you have bought it could take time to find buyers.
-- There is no guarantee that personalised number plates will continue to be popular, though here in the UAE a drop in prices is considered unlikely. However, in some countries they are now considered poor taste, showy or vain.
-- Do not become too attached to a number as an investment – you must be ready to sell when the right buyer comes along.
-- Investors in some countries are buying plates for children to give to them when they reach 18 years old in the hope that the value of the plate will mature, too.
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