Deyaar Chief Charts Steady Course
The National, 1 December 2008
Deyaar Development (DEYAAR), the Dubai-based property firm, expects to shrug off a decline in Dubai property values, beat last year’s profits, and seek a rating to help it fund new projects, its chief executive says.
“The Company is on track to outperform 2007’s net profit,” Marcus Giebel said. Deyaar reported a net profit of Dh410 million (US$111.7m) last year and has in excess of Dh25 billion worth of projects under construction and in the pipeline, mostly in the UAE.
Mr. Giebel, who took the helm at Deyaar in mid-August, said he expected earnings before interest, tax, depreciation and amortization, or EBITDA, to grow by 30% this year, despite a sales slump, job cuts and tightened bank lending for home buyers.
But concerns over the health of Dubai’s property industry and an ongoing investigation into alleged corruption at Deyaar that led to the arrest of its former chief executive continue to hit the company’s shares. Shares in the company that is traded on the Dubai Financial Market are down 76% this year, a bigger drop than the 68% fall in the market’s general index over the same period.
“From an income statement and balance sheet perspective, Deyaar is perfectly positioned to face the storm and to capture opportunities that may arise at the end of the storm,” said Mr. Giebel, who was previously chief executive of Vedera Capital, a UAE-based investment firm specializing in property and financial services.
HSBC Holdings warned this month that property prices fell in Dubai for the first time since the bank began lending to home buyers in the emirate. Property now accounts for more than 30% of Dubai’s economy.
Mr Giebel said the developer has started to see the effects of the slowdown in Dubai’s property boom. “We haven’t seen any payment defaults but people are negotiating to find solutions,” he said.
Home sales in Dubai have been constrained by banks and mortgage lenders shutting off access to finance in the past few months amid rising fears of defaults. Amlak finance, an Islamic mortgage lender now part of Emirates Development Bank, has stopped lending completely. Offering buyers new payment options is one solution that Deyaar is considering to keep selling homes. “Fear, uncertainty and doubt are forcing investors to act irrationally,” Mr. Giebel said.
“We are looking at providing them with payment solutions.” The company has no shortage of properties to sell with developments in Dubai located in the Dubai Marina, Jumeirah Lake Towers and Business Bay. It also has the Dana towers in Sharjah.
“Our strategy now is to go to the basics and fundamentals,” he said. “We have to check our cash positions, stress test our portfolio through an in-house crisis monitoring committee, and finally evaluate opportunities when they arise.”
After I reading this article I have a question and I hope somebody to explain for me .
What does “seek a rating to help it to fund new projects” mean?
What kind of rating is Deyaar seeking?
What actions can Government authorities take to help both borrowers and beleaguered property companies like Deyaar?
What does “seek a rating to help it to fund new projects” mean?
What kind of rating is Deyaar seeking?
What actions can Government authorities take to help both borrowers and beleaguered property companies like Deyaar?
He means a Credit-Rating by one of the three big institutes that rate the financial health of any proposed borrower..Without such a rating most international lenders would decline to offer loans or financing to any new projects.
As for government actions we might see a number of mergers making local lenders stronger, in particular if Abu Dhabi gets involved...
As for government actions we might see a number of mergers making local lenders stronger, in particular if Abu Dhabi gets involved...
Do mean the same what happn to Amlak and Tamweel merger?!
“Fear, uncertainty and doubt are forcing investors to act irrationally.”
Can anybody explain what these fear, uncertainty and doubt are?
And how they can force investors to make irrational decisions?
“Fear, uncertainty and doubt are forcing investors to act irrationally.”
Yes, something similar to the Amlak/Tamweel bailout...
Like all markets the stockmarket is driven by greed and fear which creates a herd mentality.
Consider a flock of horses (investors), they know that one of them got bitten by a snake recently..but they run along, suddenly one of them notice a long thin object on the ground, how will that horse react?
It will panic..even if it´s a stick really.
The other horses will panic and think "Snake! Snake!" and everyone will react like it was a snake.
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and I will be more aggrassive to ask you more question.
