Deyaar DEYR.DU, a developer in Dubai, announced on Monday that it had removed 20 percent of its workforce. The company said it will organize co-investment funds for its expansion plans overseas and re-start the development of projects by 2010.
"2009 was a development holiday. In 2010 we have to start developing again," Chief Executive Markus Giebel told the Reuters Middle East Investment Summit on Tuesday.
Deyaar, the second-largest listed developer in Dubai, plans to increase the size of its property portfolio in the next five years. The company said their investors already received more than seven projects in the third quarter and were assured of another six projects by 2010.
According to Giebel, he is hoping to close the distressed debt fund of the firm amounting to 500 million dirham ($136.1 million) by the end of 2009. He will also attempt to launch a co-investment fund by 2010.
He added that the firm will take its time to identify projects as the company seeks several expansion opportunities across the Middle East, which includes Lebanon and Saudi Arabia.
"The shelf life of a product in 2008 was two to four days. Now the shelf life is six to twelve months so we have all the time in the world to make a decision," said Giebel, adding the firm can afford to spend more than 500 million dirhams.
"100 million dirhams investment goes a long way … 100 million dirhams gives you a billion dirhams of development in a joint venture structure."
Once focused on high-rise buildings, Deyaar has shifted its focus to low-cost housing and villas. "The next big thing is hands-down low cost housing… there are 90 million people in the Middle East who are eligible for low-cost housing. A developing country needs a middle class. A middle class can’t afford a million dollar apartment in the Marina. The transition of the UAE to middle class is imperative," Giebel said.
He also revealed that Dubai’s property market already reached the bottom.
"If we look back at history, in Singapore it took two to two-and-a-half years to find a bottom, but then the recovery was V shaped … Hong Kong was different … Dubai is more similar to Singapore."
The property sector in Dubai has been greatly affected by the global financial turmoil as several developers cancel or slow-down projects and lay-off many employees.
Prices of property, which approximately dropped 50% from their peaks, have been under pressure since last year when a slump in oil prices and the financial crisis ended the six-year economic growth in the Gulf region.