A number of property agencies in Dubai are marketing properties as “distress sales” in Dubai in a bid to drum up interest in what remains a sluggish market.
Last week, The National received an email blast from the Dubai-based agency Homes4-Life marketing a town house in phase 2 of Dubai Properties’ Mudon project. The 3,808 Type A unit – an end terrace with a side and back garden – was being marketed as a distress sale, with Dh300,000 knocked off an original price of Dh3 million.
“This particular owner is really desperate,” said the Homes4Life director Nitin Giyanani. “You don’t get Mudon Type A properties at these prices. But because this guy cannot make the payments, that is why he is letting it go at such a brilliant price.”
Another agency marketing distressed properties is Dubai-based Driven Properties. These include a two-bedroom Palazzo Versace-serviced apartment at Dubai Creekside for Dh5.2m and a five-bed villa at Living Legends in Dubailand for Dh3m.
Robert Richards, the Driven Properties operations director, argued that there had been an increased in distressed properties coming on to the market over the past six to 12 months.
“The main reason is what’s happening around the world. The biggest investors we’ve seen with distressed deals are the Russians, because they can’t get money out of Russia so they’re trying to sell assets to get funds,” he said.
“A lot of it is buyers who are only looking for deals at under market rates. That’s led to agents having to push sellers to drop prices. Investors are extremely cautious at the moment,” said Mr Richards.
However, others said that buyers merely seeking deals was not a sign that there are more forced sellers.
“I don’t think there has been any sign of distressed sales,” said David Godchaux, the chief executive of Core Savills.
“The market is clearly down, but there is no crash. If people want to sell, they are less pushed than in 2009 because they still have a job, and even with lower prices the economy is not that bad. Companies aren’t massively firing.”
Mark Wellman-Riggs, sales director at ERE Homes, said: “I’m not convinced there are proper distressed sales out there. What I see as a distressed sale is someone’s market value is Dh3m, but if they’re selling as distressed they’re knocking Dh500,000 off to sell straight away. Too many agents advertise distressed sales, but when you ring them you find the seller wants a quick sale but still at market price.”
Mr Godchaux added that some of the properties being marketed as distressed sales are “non-existent”.
“Some are advertising real properties that are not distressed, or properties that are not real and prices that are crazy.”
One small Dubai portal had three distressed properties listed by Espace Real Estate. However, when contacted by The National, John Lyons, Espace’s head of sales and leasing, said that these were neither “distressed” properties or even current listings, with one having been sold at above asking price 18 months ago.
“I wouldn’t say there is much evidence of distress in the market right now. Yes, transaction volumes are lower and values have trended downwards, but a lot of this is the result of a natural cyclical downturn, tighter mortgage regulations, higher transfer fees [and] a strong US dollar,” said Mr Lyons.
“Despite the price correction, we’ve not seen people making a dash for the exits.”
Haider Ali Khan, chief executive of the property portal Bayut.com said that the number of distressed listings on its site had increased in the second half of 2015, but added that they still made up just 0.6 per cent of its total listings.
“Distressed listings are few and far between and could be attributable to either edgy landlords or properties not being competitive,” he said.
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