Dubai real estate to bottom out in H2 - Deyaar CEO

Deyaar sees Dubai real estate bottoming out in the second half but will shift its focus from the UAE to emerging markets next year, and is mulling a MENA wide property fund, its chief executive said on Saturday.

''We think the bottom will be reached in one year, faster than in any other crisis. The reason for this acceleration is government intervention,'' Markus Giebel told Arabian Business in an interview at the World Economic Forum in Jordan.

This would be in the third or fourth quarter of this year, he added.

Deyaar plans to slow down construction on 25 percent of its projects, to hold back 25 percent of the portfolio that has not been released for sale and to consolidate 25 percent of the properties that have already been sold.

This is typically being done by offering customers another property in a more popular part of town.

The company is banking that some of the buyers in remote parts of Dubai, such as Jebel Ali, will be interested in switching to properties in central areas with more amenities, such as Business Bay.

More than half of the construction projects in the UAE, estimated to be worth $582bn, have been put on hold according to a February report by market research firm Proleads.

Although the fundamentals of the Abu Dhabi market remain good, Giebel said he was more interested in international markets.

''For Deyaar, we would rather look at the international market where we can identify a true undersupply in a certain product area,'' he said.

The company is currently in talks with developers in a number of emerging markets, with a view to forming joint ventures that would build affordable housing.

Deyaar could end up launching projects in three to seven emerging markets, Giebel said, citing Saudi Arabia, Libya and India as some of the countries currently being considered. ''Saudi is an obvious choice,'' he said.

The Dubai based developer does not expect to tap the debt markets for these projects.

''I think the debt markets are very difficult right now for anybody to access, also for us,'' Giebel said.

''If you find the right partner, maybe they can bring the land and you bring the money for the development. That is a good symbiotic relationship.''

Deyaar’s new fund management unit has raised AED300m of an AED500m ($137m) fund to buy back properties sold to investors who can no longer pay for their purchases, and a MENA wide fund could be in the pipeline.

It will launch the remaining $200m after presenting the project portfolio management. ''So far the fund has had a very good reception,'' Giebel said.

''The first one is a fund that looks at distressed Deyaar properties, that is what we understand better than anybody else. The second one could be an opportunity fund where we also look at more MENA region opportunities.''

Flamingo Creek, a residential project in Dubai, is the only development Deyaar will be breaking ground on this year.

The company will focus on consolidation and providing support for buyers to keep them from defaulting, Giebel said.

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