Thursday, March 19, 2009

Deyaar unveils 2009 Business Strategy

Deyaar Development has sketched out a strategy for 2009, to reduce the default rates by the company, revealed the Chief Executive, Markus Giebel.

"About 60 percent of our customers have come back to us, saying they were unable to pay up on their property. We hope that our new strategy would help in bringing down our existing default rates to around 20 percent," Giebel said.

He said Deyaar will not see any major impact on its profitability, as it has adopted a consolidation strategy, and projected that the 2009 projects of the company would be about Dh.500mn touching 2007 levels.

"Profits and revenues are not the major issues for us today. What is more important, currently, is to ensure sufficient cash flow, and help our customers facing financial difficulties," Giebel said.
As per Deyaar's new consolidation strategy, the Deyaar Park, Deyaar Enclave and Mirar Residences, comprising four million square foot area in Dubai, would be consolidated with the rest of Deyaar portfolio.

Investors in these projects will be given the option to transfer their ownership to projects which would be completed on a fast-track basis.

Deyaar plans to do a project consolidation of up to 10 percent cash-back of the paid-up amount, and a 50 percent consolidation option on Deyaar Park, Mirar Residences and Deyaar Enclave. On Deyaar Enclave, the company plans to give the option of 100 percent pay-back to the investor.

"We will first return the money to the investor and go to RERA, saying we have no liability. Only then will RERA release the Escrow," Giebel said.

The prices of units that were sold at the time of launch, or during the initial stages of construction, will be reduced inline with lower construction costs, reveals the new strategy by Deyaar.

For instance, the prices of Deyaar's Oxford Tower will be reduced by an average of 30 percent from Dh.2450 per square feet to Dh.1715 per square feet. In Fairview Residency, price reductions will be an average of 25 percent from Dh.1845 per square foot to Dh.1385 per square foot.

The Bristol Residence sales prices will be reduced by an average of 25 percent from Dh.2079 per square foot to Dh.1560 per square foot. The Bristol Office prices will be reduced by 30 percent on an average from Dh.2788 per square foot to Dh.1950 per square foot.

Deyaar will offer lower installments to customers on certain units through soft payment plans, and this will be implemented by adjusting original payment schedule, permitting customers facing liquidity problems to avoid default and meeting their obligations.

Giebel also mentioned that in certain locations with infrastructure problems, the company plans to give buyers an option to swap for properties in other locations. However, this option will be on a purely voluntary basis, and this will give customers the option to transfer ownership to premium projects in prime locations. It will also allow them to consolidate their total outstanding payments.

Deyaar pointed out that it has not cancelled any of its projects so far, not are there any defaults being recorded. Deyaar's strategy is inline with regulations by RERA, and all of its projects will adhere to the Escrow Law. The company is also under negotiations with financial institutions to develop special mortgage packages for customers and has already signed a deal with Dubai Islamic Bank, he concluded.

No comments: