Friday, Apr 06, 2012
Gulf News
Dubai The Dubai Land Department has announced that the number of foreclosed properties is rising with more than 80 to be put up for auction this year.
The department put 35 foreclosed properties up for auction in the first bulk sale of repossessed homes last year and will put up to 80 properties this year.
“We sold these properties through several auctions during the year. However, the number this year is expected to be bigger,” said Humaid Al Shamsi, section head at the registration department.
“While the auction concept is still new in the UAE, it is well attended. All the properties sold for more than the reserve price.”
He said that 70 per cent of the properties auctioned had been repossessed by banks as owners defaulted on instalments.
Dubai’s 2008 Mortgage Law No 14 was designed to speed up the foreclosure process, giving lenders a chance to recoup their losses on defaulted property.
Instead of going through the civil court, under the new law lenders could execute a foreclosure through a simple hearing before a judge.
After the judge’s order is issued, the property could be auctioned by the Land Department.
The sale may clear the way for lenders to offload millions of dirhams in repossessed property, said Muhannad Al Wadiya, managing director of Harbor Real Estate.
Defaults
“I do believe that the number of properties that should go to auction is much bigger than this, but almost 20 per cent of the real estate market supplies are defaulted.’
But he remarked that the system has been slow to develop. In addition to the process for obtaining judgments, there were issues in establishing the values of the properties.
“These auctions are controlled by the Land Department which has been very cautious about flooding the market with low-cost properties when prices had already dropped by 50 per cent and the reserve prices are set too high. But now the prices are more realistic, making them attractive to buyers.”
Al Wadiya added that the auction process should be more organised, transparent and properly announced to involve all - buyers, sellers, banks and auction operators.
Some officials were concerned about flooding the market with low-priced homes at a time when prices are already 50 per cent below peak levels in some places, Al Wadiya said.
He said that although auctions may prompt lenders to start more foreclosure proceedings, banks and mortgage companies have been focusing more on renegotiating deals and using foreclosure as a last resort.
“It will be the last option for all financial institutions, Muhannad said.
By Zaher Bitar?Staff Reporter
Gulf News 2012. All rights reserved.
