The Dubai Land Department (DLD), the emirate’s property registration agency, is set to auction off a block of up to 35 foreclosed homes in an effort to recover losses on nonperforming loans. It would be the fourth sale for the month and more are planned as Dubai continues to struggle toward a recovery from losses sustained throughout the global financial crisis. Real estate prices have tumbled as much as 60% there since 2006 and it was only in 2008 that new laws were introduced regarding foreclosure and repossession in response to the growing number of homeowners who were defaulting on their loans. For more on this continue reading the following article from Property Wire.
Up to 80 properties in Dubai are set to be sold by the Dubai Land Department (DLD) this year as banks move to take action to recoup losses from home owners in mortgage default.
The property registration agency, which auctioned 35 properties last year, said it could auction up to 35 homes in its fourth sale this month and expects to hold at least another two auctions later in the year.
‘We expect to auction 30 to 35 properties in April, we have a maximum of five per day,’ said DLD’s Humaid Omran Al Shamsi. The properties, 70% of which have been repossessed by banks, are in several locations across Dubai including Dubai Marina and Jumeirah Beach Residence.
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Dubai was hit hard by the global economic downturn which saw house prices tumble nearly 60% from their peak in 2008 after credit dried up and speculators who had fuelled 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$ 16 billion worth 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 AED1.2 million for AED1.22 million.
Real estate auctions are still in their infancy in Dubai but could prove popular, according to Richard Paul, head of residential valuations at property consultant Cluttons.
‘It’s a very new market and it’s not particularly tested. 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 explained.
Meanwhile, DLD figures show that Indians topped the list of first time property buyers in Dubai last year, acquiring AED2.1 billion of real estate in the emirate. New buyers from India made up 927 out of a total 35,297 transactions worth AED143 billion last year, 16% of the total.
DLD did not confirm the nationality of the second largest new group of buyers but said UAE nationals ranked third. Emirati buyers invested AED1.57 billion, 12% of new buyers last year. The British were the largest European group of buyers.
This article was republished with permission from Property Wire.