The Dubai Land Department (DLD) has stopped auctioning repossessed properties, the head of the auction department said.
DLD, which auctioned 120 properties last year, will continue to auction privately-owned properties with four offices, three apartments and two plots of land set to go under the hammer Monday, said Humaid Omran Al Shamsi.
“We don’t do foreclosing auctions anymore; we are not involved in this. The courts wanted to shift to a private company. Because those properties need more requirements they will do it [through] Emirates Auction under our regulations,” he told Arabian Business.
The number of owners defaulting on mortgage repayments soared in the wake of the economic downturn, which saw Dubai property prices decline by over 60 percent. The emirate introduced a repossession law in 2008 setting out rules for default, foreclosure and repossession.
Barclays was the first bank to repossess a home in January 2010, clearing the way for lenders holding about US$16bn of homes loans to attempt to recover their losses. The British lender sold its first repossessed property, a villa in The Springs, for AED1.22m in May 2011.
DLD has auctioned 80 foreclosed properties in the last two years as banks moved to recoup losses from homeowners in mortgage default.
Red tape has hampered the growth of Dubai’s property auction market, said Richard Paul, head of residential valuations at property consultant Cluttons.
“There were some initial teething problems because the reserve prices were set quite high and they [DLD] have a policy that if no one comes in higher than that reserve price it remains unsold,” he said.
“It’s very difficult to get a change of ownership from the original owner to the bank and so then very difficult to go through the process to get it to auction.”
DLD will continue to auction property on behalf of investors and developers, said Al Shamsi. The government body will auction nine lots on Monday, including four offices in Ontario Tower, Business Bay and a duplex apartment in World Centre Residence.
Two plots of land on Palm Jumeirah will also be auctioned, each with a reserve price of AED13.2m.