Deyaar Development will not be seeking a credit rating anymore as it has cancelled plans to launch a sukuk. It is now focusing on working out payment solutions for the benefit of its customers, a top company executive said.
"Our focus is completely different now and we are working out various solutions for the benefit of our customers and so acquiring a rating is not on our agenda for now. We will think about it in the next two to three years," Markus Giebel, Chief Executive Officer, Deyaar, told Emirates Business.
"When the economy was strong, profits were high and the announcement of profits was important for any organisation. Profits right now don't mean anything and the cash position of a company will be important. Developers previously were leveraging upwards, however, now is the time to de-leverage."
Outlining Deyaar's business strategies in 2009, Giebel said 25 per cent of its properties will be consolidated. The company's total property portfolio is worth Dh20 billion.
"Through this initiative, we will offer customers the benefit of adjusted prices in line with a decrease in construction costs and quicker handover of developments that will be completed on a fast track basis," Giebel said.
"This is a severe re-alignment that we are doing and it is being done for the customer and not us. We have done this to assist our customers in coping with the current market situation. This will cost us money, but we will still go ahead for the benefit of our customers."
Deyaar had launched projects with high prices in relation to the then positive market conditions, however, those prices are not going to hold true anymore, he said.
"The way the real estate prices will be adjusted on some of our properties will be by increasing the level of the paid up amount. So if a customer has paid 10 per cent of the old price and after we realign the price per square foot to a reduced amount, the way we give benefit to the customer will be that we will raise the level of the paid amount to say 40 or 50 per cent. This will, however, depend on a case-to-case basis," said Giebel.
He did not say which properties will see a correction in prices, but is expected to announce this in one week's time. Deyaar will be holding investor group meetings to discuss the situation of its properties on hand.
"We have set a 25 per cent strategy in place. We have deferred plans to launch a quarter of our other projects. We have the land with us and have done all the designs, but we have put these properties on hold. We will not look at them for another one to three years," he said.
Another quarter of Deyaar projects where buyers have purchased units but infrastructure work in those areas has not started, it has prepared a draft plan to allow investors a smooth transition to better properties.