If number plates, horses and camels can go under the hammer, why can’t plots, apartments and villas? In a happening market such as Dubai’s, high-net-worth individuals are increasingly willing to bid handsomely for products of their choice – be it a piece of prime land, a room with a view or an ideal office space. They’re being dished out by owners of such properties, who use the auction route to extract the maximum price.

There’s nothing surprising about the rising trend of property auctions, but it sets them apart from the other investors who are either putting hard-earned money into property to save rent, or flipping them to make some fast cash. Even though the largest of auctions do not involve more than a few hundred bidders, the idea of property auctions occasionally stir up an already buoyant market. Most tier-2 developers in Dubai are acquiring prime plots from master developers through “close-door” auctions. It’s an extension of the demand that’s driving the industry, and the trend is here to stay. After all, if a car number plate can fetch a sum of five million dirhams ($1.36 million) then one can imagine the amount some would be willing to pay for a perfect plot to house a mixed-use development. Despite greater interest and widening options, however, the exclusivity factor is set to keep auctions an elitist activity. Since rich buyers openly bid in a charged environment, auctions also inflate sales prices, which may have a spiraling effect on the cost of property.

Dubai’s no stranger to the auction phenomenon. In June 2005, Dubai Properties – a subsidiary of Dubai Holdings – set up Mazad, the country’s first private property auction house. The idea was to cater to a growing number of high-net-worth investors looking for viable real estate opportunities with optimum re-turns on investment. Since 2005, Mazad has raised more than AED 2 billion ($544 million) in sales. On the sidelines of Cityscape 2006, during the copmany’s third public sale, Mazad raised more than AED 250 million ($68 million) for 11 select Dubai Properties lots. Recently, Mazad, which now operates under Salwan, also a subsidiary of Dubai Properties Group, fetched nearly 250 million dirhams ($68 million) from a private auction.

Most of what stands at Business Bay today is built on plots that were auctioned off by Mazad in the winter of 2005, which it collected AED 1 billion ($272.3 million) for. The biggest plot sold for AED 214 million ($58.3 million) and the smallest for AED 45 million ($12.3 million).

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