07 December 2021 – Gulf News – www.gulfnews.com
Successful bids for Dh500m and Dh232m place hotel projects right in centre of action.
Dubai: Property investors in Dubai are getting some good deals on hotels – at the auction. That’s right, hotels and commercial real estate are becoming hot-ticket items in any property-related auctions that are happening these days in Dubai.
Just last month, a Dh500 million asking bid for a mixed-used project on the Palm had no difficulty finding an investor, while in October, a G+22-storey twin-tower project in IMPZ zone easily picked up a bid for Dh232 million. Both deals happened through Emirates Auction.
Hotel-specific and office projects are once again on investors’ must-buy list in the emirate. What is interesting is that these transactions – especially of such big-ticket projects – are happening through auctions.
The Palm Project – Initial bid was set at Dh500.1 million. It features two ground plus seven storey building connected by a sky bridge.
The IMPZ Project – Bid was set at Dh232 million and features a ground plus 22-storey twin-tower.
A big plus for investors
For investors, buying through an auction comes with clear benefits. “These projects would have cleared all the initial official clearances, would have reached a certain level in their development and needs a new investor to get it completed,” said an industry source who has been closely tracking another high-profile auction – the hotel component of the Dh1 billion Marina 101 skyscraper.
“Auctions come at a significant discount compared to what it would be to launch and build a brand new hotel in the city.”
More on the way?
There should be more commercial/hotel properties in upcoming auctions. These properties typically have funding or related issues leading to delays, and the creditors – typically banks – feel auctioning them off would be the best option to get their funds back. It was certainly happening with the office buildings that were placed for bids last summer, signalling that investors were confident that Dubai’s commercial real estate too would see a quick recovery.
“Properties normally listed on Emirates Auction are done through the banks and/or creditors,” said Sameer Lakhani, Managing Director at Global Capital Partners. “The Dh500 million Palm project is easily the largest ticket item sale this year (subject to it going through the courts). “Investors/creditors and banks have resorted to Emirates Auction to off load projects/assets that have been burdened by debt or facing other issues. But the increased interest in these auctions is a marker for the upbeat state of the property market.
“Clearly, there is increased emphasis at reviving stalled projects in addition to looking at distressed assets.”
The hotel component of the Dh1 billion Marina 101 has been placed on auction multiple times in recent months, but could not find a bidder. The long delay in the project, launched in 2005, could have cast doubts in potential investor minds, even though it is past the 97% completion.
After the initial auction bid, set at Dh361 million, it was brought down to Dh182 million. But with the same result – no bids.
Lifting all assets
Dubai’s overall residential property market is in the midst of a sharp recovery, with each of the three months since September showing record sales transactions. This has rubbed off on other property types too, whether it is leasing a facility in Jebel Ali Free Zone or securing one of the biggest plot sales.
“Each sign of a market heading for full recovery will lead to more activity on property auctions,” said a market source. “That’s where some of the best set of deals could happen next.”