Nakheel set new standards for land sales with radical sealed bid process

Nakheel, a Dubai World company and one of the world's largest and most innovative real estate developers, has introduced a new and radical sealed bid process for land sales. Last week, Nakheel sold 23 plots within the Canal District at Waterfront in this way and in the process set new standards of transparency and openness for land sales in Dubai.

Approved by the Real Estate Regulatory Authority (RERA), the sealed bid process changes the fundamental terms and conditions for buyers of the plots and means they are obligated to develop the purchased land and cannot re-sell. Real estate brokers are also not permitted to purchase land through the new system.

Manal Shaheen, Director Sales, Marketing & Customer Service, said:

"We introduced a sealed bid procedure at Waterfront to inject greater integrity, honesty and fairness into the sales process. Transparency is very important to us at Nakheel and this is one of a raft of initiatives we are undertaking.

"We wanted to make the process a strict and regulated one; it is this way that benefits all parties involved. The new terms and conditions under the sealed bid process have a positive impact for all investors in a certain phase or area of a development. As buyers must develop rather than sell on the land, all investors can be guaranteed that neighboring plots will be developed and not left unoccupied."

For the sealed bid process for Canal District at Waterfront, Nakheel invited a selection of pre-qualified investors to attend an event at the Raffles Hotel, Dubai that was overseen by an auditor. One plot was auctioned per hour over a five day period. Bids for each plot were submitted by interested parties in sealed envelopes with the contents reviewed by the auditors and the winning result revealed publicly to the room of potential investors.

Manal Shaheen continued:

"What we witnessed last week was a never seen before initiative in the real estate market in Dubai. At Nakheel, we pride ourselves on leading the way in best practice across all our business activity; and this is yet another example of where we have strived to set new standards within the Dubai property market. We hope that this will pave the way for other developers in the region to follow suit."

The Canal District is a highly desirable location within Nakheel's Waterfront development. Built over 1.8 million square metres of land, it will ultimately house a population of 75,000 people and is due for completion in 2016. During the sealed bid process, one plot at the Canal District was sold for hotel and retail development, 14 for mixed use development and eight for residential.

Waterfront is the world's largest coastal development and it will provide more than 70 kilometres of coastline to Dubai. It is an entirely new masterplanned city, which will become home to an estimated population of 1.5 million people.

Alya Mahdy, General Manager, Sales Operations, Nakheel. Vishal Takkar, Auditor, Dubai World. Mark Stewien, Legal Counsel, Waterfront. David Lawrence, General Manager, Research & Development, Waterfront. Giles Clayton-Jones, General Manager, Marketing, Waterfront.

A step-by-step guide to how the sealed bid auction process works

Pre-auction:

• Announcement of intention to sell land made seven to ten days before date of sale
• After the announcement, invitations are sent to all developers registered with the Dubai Land Department and RERA
• All developers interested in participating in the sale and willing to abide by the strict regulations are sent details of the land
• Sale takes place on designated date

Phases of sale:

1. Property checkpoint: Nakheel team checks that all the developers in attendance have been invited and are clear on the terms on which the sale will be conducted.
2. Participation deposit: Once cleared, each developer has to pay an AED 100,000 refundable deposit
3. Registration and application: After paying the deposit developers are registered and given a unique number that will be used throughout the remainder of the sales process. All registered developers then gather in a room, where a large screen displays the names and numbers of the plots up for sale, and a Nakheel official spends a few minutes briefing everyone on the plots available, with the aid of diagrams. All developers then fill out applications for the plots that they wish to bid on, and place the applications in a box.
4. Announcement of winning bid: Once all applications have been submitted, the Dubai World legal team opens the box in front of everyone and announces the unique number for each of the winning bids. If any objections are raised regarding the outcome of the individual sales, the winning price will be revealed.
5. Deposit by winner to secure bid: Once the winner has been declared they must pay a ten per cent deposit to Nakheel Customer Service and receive the terms.

General Conditions:

• Only development companies registered with the Dubai Land Department and RERA may participate in the sales process
• Developers are not permitted to resell the land that they purchase through this system
• Real estate brokers are not permitted to purchase land through the new system.