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29 March 2024

We plan to make Deyaar a global brand

The business fundamentals of Deyaar are probably as strong as ever, said Markus Giebel (XAVIER WILSON)

Published
By Parag Deulgaonkar

Dubai-based Deyaar Development is poised to go global under the strategic guidance of its new Chief Executive Officer.

Markus Alexander Giebel, the new CEO, has already started working on his plans to make Deyaar a "global" brand. After taking over the reins of the Dubai-listed real estate developer, Giebel is set to announce a master development in Saudi Arabia soon.

"We are in advanced talks for our master development there. We will make an announcement in the coming months," he told Emirates Business in an exclusive interview. The company is also mulling over the option of acquiring companies for its international expansion, but will not pursue such an option in the UAE.



You have moved from building single towers to entire communities. What has driven this change?

It is a natural progression for us. For example, if you are a car manufacturer who starts with one model and it sells well all over the country and becomes your flagship product, subsequently you follow up with more models. We are following the same strategy. Our single tower developments have proved very effective and profitable, and so as a natural progression we have gone from being single tower developer to a community developer.

How would you deal with the infrastructure issues since you do not have any previous experience in master developments?

We will engage consultants for this purpose and also develop our own expertise. In fact, in our own master developments, we can actually tackle the power and district cooling issues ourselves.

So is diversification the next step?

It could be a follow up but we do not know how far we will go. Vertical integration always makes sense, if we can do it less expensively by ourselves or more efficiently than third parties. There are different aspects of vertical integration and we will do whatever makes sense. However, we are very open to district cooling and services management.

Are joint ventures a possibility for this vertical integration?

It could be. We are value driven people and we will do whatever makes more sense for our shareholders and for the long-term growth of our company. However, it is too early to comment.

Do you have a big enough land bank to launch more master developments in Dubai?

During Cityscape Dubai 2008, we showcased three projects – Michael Schumacher World Champion Tower in the Central Business District of Reem Island, Abu Dhabi; Deyaar Enclave, our first mid-size community development at the International Media Production Zone and Deyaar Village, an environmentally friendly mixed-use community off Al Warqa.

We want to make communities that are good for people to live in. We do have enough land in the UAE but we may need to acquire some more in order to grow. We are not ruling out the other emirates. If it makes sense then we shall build community developments in other emirates as well.

How many more master communities are you planning in Dubai?

It is confidential. Unfortunately, I cannot reveal the number.

Aren't you a bit late in entering the branding segment of real estate?

The ones that we see being sold as branded towers are average ones, with brand ambassadors just endorsing them. And that is exactly what we do not want.

Our strategy is that we will not have one iconic tower, but build five, six or seven towers jointly. We will introduce the Michael Schumacher World Champion Tower all around the world. So it will not be a single tower to which we have put a branding on top, but will be a multi-tower global strategy. Michael Schumacher stands for quality, delivery and winning, which is reflected in our own brand. Deyaar will be a global brand and not just a UAE brand and we have started work on that.

When will you launch your first project in Saudi Arabia?

We are in advanced talks for our master development there. It is on a scale where communities can prosper. Again, we do not believe that it is good to do large cities for millions of people. I don't think one should be thinking for the next 10 to 15 years. To predict four to five years down the line is difficult enough, but to predict the market conditions in the next 15 to 20 years is close to impossible. I think to create shareholders' value we have to stay in a particular size. We believe developing communities for 25,000 to 30,000 people is the right size for us.

Any particular reason for cancelling your pact with Ansal API in India?

It was not that the deal was bad with Ansal, but it just did not fit our portfolio. We certainly would like to be in India and are open to joint ventures anywhere in the world. We are currently in the process of realigning our portfolio.

Has the global credit crisis changed your business plan for 2009?

It has not changed our plans nor will it slow us down with our local projects.

However, we have to go a little bit slow on our international expansion plans than

we would have liked. Market conditions in the next six months will define our move.

Do you have enough cash to fund your projects?

If you look at our third quarter results, we reported net profit of Dh311.9 million, an increase of 26 per cent compared to the second quarter and up 56 per cent compared to the third quarter of 2007. Our financials are strong for day-to-day operations.

But for international expansion, we have many ways to raise capital. We can raise it through the debt market, then look at equity players or even joint ventures. A real estate fund is another option and we could even create our asset management group.

During this global meltdown, are you finding it tough to get loans from banks?

It is probably easier for us compared to others because our balance sheet is very strong. Again, one of the largest shareholders of our company is the largest bank here in Dubai. So it is somewhat easier for us despite the tough times.

Are you in talks with the government to acquire more land in Dubai?

We would always like to talk to the government and there are many reasons for that. We believe in Dubai and if the government has an expansion strategy for communities, we would certainly like to be part of it.

In view of the new regulations on buy- back announced by Esca, do you plan to exercise such an option?

Buyback is always an option, but we have not declared any intention to do. However, it is certainly an option especially after the government eased the regulation.

Are you concerned about the decline in your share prices?

Absolutely not. If you look at share prices in the last six months, and you look at the real estate index of the market, our shares have outperformed the rest by far. The total global market is a troubled story, but Deyaar is very less troubled and so it is a success story.

Are you in talks to acquire Plantation Polo & Equestrian Resort from Dubai Islamic Bank?

We are not in talks with DIB and they still hold the project. We are the preferred partners for them on the real estate segment. We are happy to assist them but right now there is no deal.

Would you like to acquire firms for your regional or global expansion?

As for our international expansion, we would certainly like to purchase an entity if it is less expensive than building our own company. However, we will not pursue any such strategy in the UAE market.

Do you offer employee stock ownership plans (Esops) to your employees to retain them, or any other kind of incentives to hold them back?

We are right now finalising the terms and conditions for Esops and we believe we have everything in line to start next year.

Do you plan to buy distressed assets in the US?

It is certainly within our potential and we are monitoring the market. Right now, the US is a very attractive market if you look at a five-year outlook.

Has it been tough on you to take over a company when its ex-officials are being investigated for alleged fraud?

I cannot change the past, but I can influence the future. So I am not interested at all in what happened in the past. But, moving forward, the business fundamentals of Deyaar are probably as strong as ever. We have already said there has been no impact on the company whatsoever due to the financial irregularities.

Would you buy an apartment in Dubai?

There are two buying options — if I buy to live or I buy to invest. The fundamentals of Dubai are very strong and there is no reason why I wouldn't buy a house here.


PROFILE: Markus Alexander Giebel, CEO of Deyaar Development


In his capacity as the Chief Executive Officer at Deyaar, Giebel is responsible for the firm's operations across all its business units.

Prior to his appointment at Deyaar, he served as the Chief Executive Officer of Dubai-based Vedera Capital, where he was responsible for managing multiple real estate projects worth several billion dollars, both in the region and worldwide. He founded Marasi – a Shariah-compliant real estate fund – for the firm.

Giebel has previously served as Vice-President for Europe and the Middle East at Corning, a Fortune 500 company.

He holds more than 30 patents and has an MBA from the Switzerland Business School, and a Master's degree in mechanical engineering from the University of Munich, Germany.