Deyaar to offer more flexible tepayment plans under new strategy

Dubai: Property developer Deyaar said it is putting on hold 25 per cent of its projects and will offer customers more flexible repayment plans as part of a consolidation effort on another 25 per cent of its properties.

The flexible repayment options concern those projects which are in various phases of construction.

The move comes amid the difficult global econ-omic environment, which is also having an impact on Dubai's real estate sector, where developers have been forced to delay or abandon projects.

Chief executive officer Markus Giebel said there is no "quick fix" for the troubles currently afflicting the sector, but re-focusing Deyaar's business strategy is an important first step in addressing the issue.

"These are extraordinary and difficult times for everybody," said Giebel.

"Given the current global environment, we feel it is important that Deyaar focuses its immediate attention on adjusting its project portfolio and aligning resources to accommodate changing market dynamics for the long-term growth and stability of the regional real estate sector," he added.

The announcement is part of Deyaar's 2009 Business Strategy, launched yesterday, in which its total project portfolio, worth Dh20 billion, will be divided into four equal categories.

Giebel said that six Deyaar projects will be delivered in 2009, of which nearly 80 per cent are already completed. These projects constitute a total of 2,500 units. No new projects are likely to be announced.

As part of Deyaar's consolidation effort, customers who have purchased units in similar projects "will be offered the option to transfer their ownership to projects that will be completed on a fast-track basis, with the rest of projects being phased out."

In addition, prices of select developments will be lowered in line with a decrease in construction costs.

A re-focus of Deyaar's development strategy for this year and beyond is not entirely unexpected.

"Developers have been doing this already, by adopting more end-user focused plans, helping to encourage buying activity and possibly to curtail the potential of defaults occurring on previously purchased property," says Sana Kapadia, vice-president- equity research at EFG-Hermes in Dubai. "Depending on the nature of new payment plans, if they are spread over a longer time frame, it could suggest that developers are likely to be more cash-constrained."

Other developers, such as Omniyat Holdings, are also considering more flexible repayment plans, and last November, Emaar properties announced a two-pronged scheme - "Plan to Own" and "Rent to Own" - offering more affordable options to buyers.