Dubai offering refunds

Cash flow problems have led to a major Dubai developer slashing property prices by up to 30 per cent and introducing refunds and easier payment plans for real estate investors...

In what some analysts might describe as a sensible move and others a sign of desperation, Dubai's second largest listed developer Deyaar has unveiled a string of drastic measures to help the company ride out the property downturn in the Emirate.

Measures announced by the firm include slashing the price of units by up to 30 per cent, softening payment plans for cash strapped property investors and giving 100 per cent refunds on some postponed projects such as Deyaar Enclave.

Property investors struggling to meet repayments will also be able to downsize their units by 50 per cent and exchange a larger property for smaller one. Customers can also swap in their unit at another Deyaar development in a more central location such as Business Bay.

Other projects have been put on hold. They include Deyaar Park and Mirar Residences, the company confirmed in a statement. It also said that help customers to avoid defaulting on properties are seen as a priority.

'A financial strategy has been developed to safeguard our customers by stabilising their cash flows and helping secure easier access to finance,' said Chief Executive Markus Giebel. 'This will result in a lower of risk of defaults and lower receivables risk for Deyaar, maintaining the company's cash flow,' he added.

He expects the company to remain profitable throughout the difficult times ahead in 2009. 'Profits and revenue are not a problem, it's just cash flow,' said Giebel.

Properties handed back to the developer by distressed real estate investors are to be put into a fund and after three to five years when the market has recovered the assets in the fund will be sold.

This move is aimed at avoiding accusations of deliberately driving down property prices, Giebel explained. 'Deyaar cannot be seen to be pushing down prices by selling these properties off cheaply. This is bad for the market and bad for Dubai,' he said.

It is hoped that the measures will enable the business to reduce the per centage of defaults on its properties to single digits.

Source: www.propertywire.com