Dubai Properties plans August land auction

Auction for the lease of three Jumeirah beach club plots to be on Aug 29.
Dubai Properties plans August land auction
PROPERTY AUCTION: Dubai Properties plans to hold an auction for three beach side plots of land next month. (Getty Images)
By Rachna Uppal
Tue 06 Jul 2010 08:42 PM

Dubai Properties, part of the business empire of the emirate's ruler, plans to hold an auction for three beach side plots of land next month as Dubai struggles under a weight of sovereign and corporate debt.

Dubai Properties, part of Dubai Holding, said in an advertisement on Tuesday that the auction would take place on Aug 29.

The global financial crisis has led to a region wide real estate slump which hit cities like Dubai hard. As a result, commercial and residential property units have remained undeveloped or left vacant.

The advert said: "Dubai Properties Group intends to hold an auction for the lease of three beach club plots at Jumeirah Beach Residence Community on August 29th, 2010 following a pre qualification process."

Interested companies are asked to have at least five years experience in the hospitality sector and be a registered company within the UAE.

One analyst said any bids were likely to be low.

Saud Masud, head of research and senior real estate analyst, UBS, said: "Investors are wary of buying into any opportunities right now unless they are at distressed levels," adding that investor checks indicated appetite for transactions is absent.

Masud said: "Also not convinced that financing woes are behind us, which adds to the viability concerns of such an auction. This is a way to test the market, which unfortunately is lacking liquidity and conviction."

Credit rating agency Moody's last week downgraded Dubai Holding's lossmaking main operating arm, Dubai Holding Commercial Operations Group (DHCOG), to B2 in its highly speculative category of ratings, taking account of weakness in Dubai's real estate market and uncertainty over the company's debt restructuring.

DHCOG's restructuring troubles are the latest blow to the finances of the emirate since its flagship state conglomerate Dubai World suddenly delayed debt payments.

Dubai World has since reached a deal in principle with core creditors to restructure some $23.5 billion of debt. Dubai last year got a $10 billion emergency lifeline from its wealthy UAE neighbour Abu Dhabi, the largest in the seven member UAE federation.

The Gulf Arab emirate, famous for extravagant real estate projects like man made islands in the shape of palms and a world map, borrowed heavily to fund its transformation into a regional trade and tourism hub. It is estimated to have about $101 billion in total debt, according to a Reuters poll. (Reuters)

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