Deyaar Development yesterday said it will reduce unit prices for customers as well as offer cash back and transfer options on projects as part of its business strategy for 2009. The key motivation behind the strategy is to avoid the risk of defaults on payments as far as possible, although chief executive Markus Giebel recognised that defaults will happen. In these difficult times, you cannot help everybody. There will be a default rate in Dubai,” Giebel told reporters. We believe the toxicity of our assets right now is above 50 per cent. The toxic level of an asset class equals the expected default rate of a client. At Deyaar, we have to do our utmost to get the default rate as low as possible,” Giebel said. Prices of both sold and unsold units at four developments – Oxford, Fairview, Bristol Residence and Bristol Office – will be reduced by between 25 and 30 per cent on average. The reduction in prices will be supported by more flexible payment plans including lower instalment payments and adjustments to the payment schedule.
Customers are also being offered the chance to transfer their ownership in Deyaar Park and Mirar Residences to other projects whose development will be fast-tracked. As part of project consolidation, Deyaar is offering upto 50 per cent consolidation, and upto 10 per cent cash back on the amount paid, in a bid to reduce customer exposure. In the case of Deyaar Enclave, 100 per cent cash back is being offered, though Deyaar insists that the project has not been cancelled. Deyaar Park and Mirar are project consolidation. Enclave is a little bit different, it is also consolidation but we give 100 per cent of the money back,” explained Giebel. “It’s not cancelled, because we aim to build it when the market comes back.The real estate sector in Dubai has already begun to feel the impact of a necessary price correction in the market, after reaching hysterical levels last year. In response, several developers have indicated the need to readjust business plans and move towards a more customer focussed approach. Deyaar will soon announce the details of a large scale fund which will pool together assets of customers who have defaulted on payments. The properties will not be resold so as not to destabilise prices, according to Giebel.