Moving on

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CEO Markus Giebel says Deyaar plans to slow work on 25 percent of its future projects, and hold back 25 percent of its Dubai portfolio.

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The real estate crash has seen more than half of Dubai’s construction projects put on hold, according to a February report by research firm Proleads.

Dubai's real estate crash may prove to be good news for mid-income earners in countries far a field as India and Libya. Deyaar CEO Markus Giebel explains why his company is abandoning penthouses in favour of real homes for real people.

Perhaps it's because he's German, but Markus Giebel is unusually forthright for a man in Dubai's real estate sector. With characteristic Teutonic tact, there is no mention here of ‘cautious optimism' or of ‘bargain hunters' returning to the market.

"The crisis we have is severe, it's nothing to downplay," he says frankly. "To survive in these difficult times is tough."

There is not even the obligatory kicker about the Abu Dhabi market holding up better than others. Real estate in the UAE capital is more stable than in Dubai, he agrees, but it's not for Deyaar, the property arm of Dubai Islamic Bank, the UAE's biggest Islamic bank.

"That is a little bit late now, there was a great opportunity two years ago," Giebel says. "We would rather look at the international market where we can identify a true undersupply in a certain product area."

And while other developers have been dodging the ‘D' word, Deyaar has openly admitted that project delays are very much on the cards. The company plans to slow down construction on 25 percent of its projects, to hold back 25 percent of its Dubai portfolio that has not been released for sale, and to consolidate 25 percent of the properties that have already been sold.

Consolidation is typically being achieved by offering customers another property in a more popular part of town. The company is banking that buyers in more 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.

The AED3bn ($817m) Deyaar Park in Downtown Jebel Ali was launched in 2007 before Dubai was hit by the global recession and while the Dubai World Central airport was still on track to open later this year.

The emirate is now seeing a "re-condensation" into the old town centre, Giebel says.

"For example we have a project which is a little bit further out in Dubai. It's a project where it was a very desirable area to be, but right now it's not as desirable because around us, construction has stopped.

"These people are given an option," he continues. "Why don't you take your four bedroom apartment, we help you, and why don't you shrink it down to a two bedroom apartment in the middle of Business Bay, if you have less money to pay."

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

It comes as no surprise then, that Deyaar is all but abandoning its home market.

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.

It hopes to launch new projects in three to seven of those markets, with Saudi Arabia, Libya and India among some of the countries currently being considered. "Saudi is an obvious choice," Giebel says.

The Kingdom will use part of a $400bn stimulus package announced last month to address a longstanding housing shortage over the next five years, following years of underinvestment and strong population growth.

Giebel 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," he says. "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."

So why did it take so long to realise that it's not just rich people who need a place to live? Again, Giebel is refreshingly frank: Deyaar would not have looked at the lower end of the market unless it had to.

"We were actually very happy in the segment we were. It's a very predictable segment, it's very profitable.

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READERS' COMMENTS

deyaar the biggest liar .
Posted by umer, lahore, pakistan on Monday 1 June 2009 at 15:46 UAE time

.... after these comments from mr giebel that thay are planning to grow there business in other markets ... i think thay should first return the money of those investers whom thay are not giving time to even start projects ..... and rera should come in this mr giebel says we will grow rera sould say first pay the old customers back , thn grow .
if u are commiting that u got the money thn why not u starting the projects and if u dont want to start project thn give the money back.

Deyaar Park Jebel Ali
Posted by Sultan Khan, Dubai on Monday 1 June 2009 at 09:14 UAE time


Mr Giebel spins a good line about giving people who bought into Deyaar Park the "option" to buy another Deyaar property. If people wanted to buy elsewhere they would have done so in the first place. What about doing the "right" thing and returning people the money paid to Deyaar since Nov 2007 for a property that they have not even started constructing yet and one that they will not even commit to a start date. Their get out to returning people their money is that the project is on "hold". It's morally reprehensible to use this tactic and not return people's money when Deyaar is effectively in breach of contract. Mr Giebel should sort out issues like this before talking big about overseas expansion.

Good guy
Posted by Hans, Dubai, UAE on Sunday 31 May 2009 at 09:05 UAE time


I am a Deyaar customer for 2 years and this new CEO is a welcome change for Deyaar. The customer service department in Deira is plain idiotic and has no social skills whatsoever. However, I saw a world of difference when I visited the Monarch office where I felt that Deyaar sympathizes with me and is working with me as a partner to resolve my issues.

In a market where Hydra, Tameer and Damac exist, Deyaar is differentiating itself from these bubble companies that I hope one day will just disappear since they give the UAE a bad name. Go Deyaar, Go Giebel.

hany@ayesh.net.

Finally, someone who speaks logically
Posted by Patrick, Dubai, UAE on Saturday 30 May 2009 at 11:19 UAE time


Well done Mr. Giebel, other developers should follow Deyaar and consolidate projects that are not going to happen.

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