The non-refundable entrance fee is new to Dubai as emirate's real estate market rebounds
Dubai master developer Nakheel has begun charging property investors AED5000 ($1,361) to register to attend its sales auctions, a sign of the surge in demand for real estate in the emirate.
At an auction on June 17, for villas and plots in Nakheel’s Jumeirah Park master development, potential bidders were required to pay a non-refundable entrance fee of AED5000 to register to attend.
A Nakheel salesperson confirmed the entrance fee was payable by cheque upon arrival, with only a limited number of seats made available. In order to secure the winning bid on a villa or plot, investors were also required to pay a ten percent non-refundable deposit, with villas in the development currently being advertised for around AED3.5m.
Charging buyers an entrance fee to attend auctions or sales is a new phenomenon in Dubai and a sign of the surge in demand for real estate, said David Lawes, senior residential consultant at Better Homes, Dubai’s largest real estate agency.
“This is not common practice in Dubai. It may be a strategic attempt to attract a high end investor demographic and create exclusivity around the product. Perhaps it is an attempt to keep proceedings under control and also generate some revenue, taking advantage of the strength of demand in the market,” he added.
Villas in the development have certainly proved popular. Property investors earlier this month snapped up 350 newly-launched villas from Nakheel in five hours, bringing in sales values in excess of AED1.4bn ($381m).
The Dubai government-owned developer said buyers began descending on Nakheel’s sales office two days ahead of the launch for the Legacy Nova Villas, to be constructed at Nakheel’s 350 hectare Jumeirah Park master community.
Demand was so high that Nakheel increased the number of villas on sale by more than 50 percent, the company said in a statement.
A Nakheel spokesman said at the time: “The response to this launch has been phenomenal. There was hardly room to move in our car park and inside our sales centre today.
"Our original plan was to bring 226 Legacy Villas to the market, but demand was so high that we added – and sold – another 124.
"All 350 Legacy Nova Villas sold out just a few hours after we opened our doors for business; yet more evidence of Dubai’s buoyant real estate market, and of investor and contractor confidence in Nakheel and its projects.”
Nakheel was one of the hardest hit by the emirate’s 2008-2009 property collapse, when prices dropped by nearly 60 percent and around half of projects were stalled, cancelled or delayed. It and agreed a $16bn debt restructuring deal in 2011 and was forced to scale back some of its plans.
In the company’s most recent financial quarter, the Dubai government-owned firm reported a profit of AED491m ($133.4m) in the quarter compared to a profit of AED362m in the corresponding period in 2012. Revenue for the first quarter was AED2.2bn, up 62 percent from a year earlier.
Nakheel did not immediately respond when contacted by Arabian Business for comment.