The UAE’s first privately run property auction promises owners a quick sale – but can they deliver?
“My two biggest regrets in life were not inventing Facebook and not being in Dubai for the last property boom,” Adham Saleh tells me as we meet in the lobby of the Oberoi Hotel in Dubai’s Business Bay – one of the by-products of the property boom he is referring to, which now forms a central part of Dubai’s latest resurgence in the world property market.
It was apparently those regrets which inspired Saleh’s latest business venture, the UAE’s first privately owned online property auction website Ezayed.com.
Born and raised in Dubai, Egyptian Adham Saleh went to university in 2004 in the UK, studying pharmacy in Manchester for four years before moving to London to do a masters in business administration at Regent’s Business School.
Although Saleh says he thrived in the UK, it wasn’t long into the term before the isolation of being thousands of miles away from his family and friends hit him. Instead of letting it get to him, Saleh decided to turn it into a business opportunity and started his own events company. He organised regular events in both Manchester and London for foreign students who were in a similar situation to him and found it difficult to socialise outside the classroom.
In 2009, Saleh returned to Dubai and tried his hand in the pharmaceutical world for the likes of GlaxoSmithKline. But, compelled by the entrepreneurial drive of running his own businesses in England, he quickly left to pursue Ezayed.com. With the help of two Emirati investors – one a silent partner and the other Rashad Al Moosa, joint managing director and board member of his family business, UAE healthcare giant Gulfdrug.
Ezayed claims to be the first RERA (Dubai’s Real Estate Regulatory Authority) certified company allowed to conduct private auctions. There will be four every year, each consisting of 25 properties, which will range in price from $136,000 to $1.36 million. Significantly, all of the properties on offer will be at a minimum of 10 per cent below market price so they will include distress sales and homeowners looking to sell their properties quickly. “Ezayed creates urgency,” says Saleh. Sellers no longer have to have their properties listed for between six and nine months. “We have given them a specific date and told them this is when your property will be sold.”
Auctions have been used in the West to promote a healthy real-estate market for a long time now and I think the concept is still fairly new here
The auctions themselves will have a physical element in the UAE but they will also be streamed live around the world. That means a potential buyer in Hong Kong or Los Angeles can take part in real time. “Auctions have been used in the West to promote a healthy property market for a long time now and I think the concept is still fairly new here.”
There have been property auctions in the past in the UAE but none were entirely privately run. Previous ones were overseen by authorities like the Dubai Land Department. Saleh is conscious of the time it will take for consumers to get to grips with the idea but is confident it will be successful: “Essentially, it is about getting a good deal.”
There is an increasing trend among UAE and global retailers to move more towards online shopping, which is likely to work in Ezayed’s favour. But with the internet still heavily populated with too much UAE property, he will have a challenge ensuring it attracts the right type of traffic.
That’s one reason why the website is steering clear of off-plan developments. It will only list completed property on its website and auctions, as Saleh believes the incentive of a good sale is enhanced when there is a tangible product on offer. There will also be no charges for buyers whatsoever, with all of Ezayed’s revenue generated from the seller and from advertising on the website. With a four per cent charge on sellers on the total sale price at auction, this might be a factor that could turn away potential homeowners.
But a bigger concern for Ezayed – which goes live this month, with the first auction planned for December – could be the fact Dubai’s property market appears to be slowing down. A report out this week by property consultancy Phidar Advisory showed a four per cent drop in property prices in the emirate in July and August. “We predict that slowdown will continue into the next year,” says Jesse Downs, managing director of Phidar. “But this is a good thing. What we’re seeing is a natural correction of the market, driven partly by over-inflated prices last year – almost 30 per cent growth – and it is also a result of government initiatives to make lending harder, which has had an impact on mortgage amounts and volumes.”
Saleh is not too worried though. “It is definitely a valid concern, I think. But the market is growing at a slower rate and I think the measures taken by the UAE government late last year – namely, making borrowing from banks more difficult and increasing the transfer fee on properties from two per cent to four per cent are working.”
Is he worried the market could go too far in the wrong direction? “Definitely not. People often look at Dubai’s property market and refer to the crash in 2008. If you look at the growth rate then, it was ridiculous, it was in the hundreds. That’s not the fact now. In fact, it is decreasing. And I think that is a good sign another bubble will not happen.”