Developers uncertain, but expert says leasing a more fruitful strategy
Although developers in Dubai are uncertain on whether to lease or auction the repossessed units, an expert says time is good to lease than sell.
When contacted by Emirates 24|7, a number of developers admitted they had repossessed properties, but were uncertain on whether to sell them through an auction at a lower price or just put them up for lease till the market recovers.
Emirates 24|7 reported in November that Tameer Holding had completed repossession of 200 units by October-end and plans to take back another 600 units for which termination process has begun.
Asked what they plan to do with the repossessed unit, Tameer President Federico Tauber said: "We may sell or rent the repossessed units depending on the market situation."
A top official of another large private real estate development company, on conditions of anonymity, said they also had not decided on their plan for repossessed properties.
"For certain, we are not going to get the price that we want for the unit. Leasing would be a better option today. However, all depends on the policy that we adopt and as of yet, we haven't decided anything."
However, Matthew Green, Head of Research & Consultancy UAE, CB Richard Ellis Ltd Middle East, says the current market conditions do not favour a developer sell his repossessed units, rather leasing it would be a more fruitful policy.
"For developers with repossessed units the ideal situation would obviously be to sell unwanted assets and reduce their liability to any further declines in property values. However, realistically current conditions are just not conducive to this approach and building a steady income stream through leasing is likely to be a more fruitful strategy in the short to medium term," he adds.
© Emirates 24|7 2010
