Dubai Land Department (DLD) expects to auction up to 80 properties this year as banks move to take action to recoup losses from homeowners in mortgage default, the head of its auction department said.
The property registration agency, which auctioned 35 properties last year, said it could auction up to 35 homes in its fourth sale, scheduled for this month.
“The number of properties will be higher than last year, for example, maybe we can reach 80 properties at the end of this year,” said Humaid Omran Al Shamsi.
“This is the fourth time we have had an auction [but] we are thinking we can get more this year. [We will auction] 30-35 properties for April and maybe May. We have a maximum of five properties per day,” he added.
The properties, 70 percent of which have been repossessed by banks, are in several locations across Dubai including Dubai Marina and Jumeirah Beach Residence, he said.
Dubai was hit hard by the global economic downturn which saw house prices tumble nearly 60 percent below their 2008-peak after credit dried up and speculators who had fueled the price increases left the market.
The emirate introduced a repossession law in 2008, under which Dubai banks were authorised to give defaulting homeowners 30 days notice to resume mortgage payments before beginning foreclosure proceedings.
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 with a reserve price of AED1.2m (US$326,700), for AED1.22m in May.
Real estate auctions are still in their infancy in Dubai but could prove popular, Richard Paul, head of residential valuations at property consultant Cluttons said.
“It’s a very new market and it’s not particularly tested [in the UAE]. That said it works in a huge amount of countries all over the world very successfully and it’s another way of disposing of property. I see it growing with more and more properties coming onto the market this way,” he said.
The total number of property sales in Dubai rose 53 percent in the first quarter of 2012, according to official data from DLD. While the volume and value of transactions is up year-on-year, the market is still far below the 1,500 transactions worth US$5.09bn that took place in 2008