Nakheel, one of the biggest property developers in Dubai, choose to make investors at auctions pay to receive the right to bid. A recent auction was held on June 17th for a number of plots and villas, located in the company’s master development in Jumeirah Park. Real or speculative interest in this particular residential development apparently is so propagandized that people do not ask many questions before they flash their cheque books.
Property investors had to pay a fee of AED5,000 if they wanted to participate in Nakheel’s latest auction. The fee was non-refundable and it allowed them to attend and bid at the auction, which offered a great variety of real estates in Jumeirah Park. Real estate agents say villas in the area are in high demand and prices are constantly rising.
From Nakheel, executives confirmed the news explaining that seats at the auction were limited. In addition, the developer shared that the entrance fee were collected in the form of cheques. Investors were also required to pay the sum as soon as they arrive at the event.
Not many auctions in Dubai make buyers and investors to pay to join the bid. Last week, one of the commentators on the local radio Dubai Eye 103.8 said she received an email asking for 50,000 Dhs bonus for a place in a an auction. However, Nakheel sets up a new practice of cashing in on the dreams of property investors!
Although entrance fee at an auction is a common practice in a few hot international markets, such as Hong Kong and New York for example, that is not the case in Dubai yet. However, Nikheel’s fees can also be part of a strategy aiming at attracting investors selectively. In addition, this move can make the products offered at the auction appear more exclusive to potential bidders.
Nevertheless, it can also be simply an attempt for making additional revenue by using the ongoing media buzz about high demand for villas in Dubai.
Nakheel’s villas are reported to enjoy a great popularity, although located quite far from the central areas of Dubai. In the beginning of June, only during five hours investors purchased 350 villas, the developer said in a press release. As a result, the values of the sales reached an excess of AED1.4 billion, according to preliminary estimates.
According to Nakheel, that particular auction was attended by a massive number of people, not necessarily end users. Also, the developer shared that the initial plan was to offer only 226 villas at the auction. However, due to the unseen demand, Nakheel decided to add 124 more properties to investors. Such unprecedented demand is not, however, observed in other areas of Dubai, developed by other than Nakheel property developers. For example, half of the more than 300 already built and ready for occupation villas in Falconcity Phase 1 remain unoccupied to date.