Pricing is priority for UAE's second property auction

PRICING STRATEGY: Sherwoods targets cheaper homes to auction after the UAE's first public property auction ended in failure earlier this week. (Getty Images)

Property consultant Sherwoods, which is to hold a public real estate auction next week, may whittle down the number of lots from 50 to 20 as it looks to beat down reserve prices to attract buyers.

The firm will auction a mixture of completed and off- plan commercial and residential properties along with plots of land in a bid to kick-start demand in Dubai, after broker Madania Real Estate failed to sell a single lot at its auction on Tuesday amid criticism the homes on offer were too expensive and didn’t represent current market prices.

Jeremy Mayhew-Sanders, the co-auctioneer and head of investments and developments at Dubai-based Sherwoods said his company would speak to sellers over the next few days to agree a reserve price so that the properties would have the best chance of attracting bids.

‘It’s very much a price sensitive issue,” said Mayhew-Sanders on Thursday.

“We will be talking to our clients and sellers over the next three or four days and agreeing reserve prices with them. That number of 50 maybe reduced quite dramatically to 20 or 30 lots and that will be done on the understanding that the seller is not tieing up with our idea of what we can sell it for,” he added.

A reserve price is the minimum price a seller is willing to accept at an auction.

Property auctions are a new concept in Dubai, where demand has dried up and prices crashed 41 percent in the first quarter this year, according to real estate consultant Colliers International.

Madania held the UAE’s first public property auction on Tuesday but Sherwoods will go a step further by selling more lots as well as off-plan properties.

Mayhew-Sanders said some of the properties going under the hammer next week did not have title deeds but permission had been sought from property watchdog Rera (the Real Estate Regulatory Authority) and the Dubai Land Department.

All four properties auctioned by Madania came with title deeds.

There was also likely to be a big gap between the guide price and the reserve price, said Mayhew-Sanders.

“The guide price is a guide. The reserve price could be considerably less. In a normal market, you find that the gap between reserve [price] and the guide is close. People see the property and the guide [price] and they know that is the area the seller is wanting to get. In Dubai the margins will be greater,” he said.

“There could always be a situation where we don’t sell on the night. If we get people bidding in the room, I will be happy. We are doing our best to get the price at a level that will get people interested,” he added.

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