Deyaar Development is a tough sell to investors these days. The Dubai developer's stock's price is down 36 per cent from November, when it posted a Dh525 million loss for the first nine months of last year.
While many UAE property and construction companies have struggled in recent months, Deyaar faces some special long-term challenges. Its board yesterday recommended a dividend should not be issued for last year, which was hardly a surprise. The company did not pay a dividend in the previous two years.
Deyaar is about to realise revenue from a wave of projects started in 2007, before the global property downturn. But it is unclear how the company is going to raise capital for future development, said Chet Riley, an analyst with Nomura Securities, which has a negative rating on the company's stock.
"They needed to deploy capital in 2010 to realise a return in 2012 and they didn't do that," Mr Riley said. "Unfortunately for real estate developers, access to capital is relatively limited." Deyaar has 10 projects in development. All are scheduled for completion by next year, according to a company spokeswoman.
"There's not much in their portfolio position past that," Mr Riley said. Deyaar has been expanding into the property management business, but that offers "low margins and small change", he said.
Beyond that, it is unclear how the company will generate revenue in the long term without any new projects under construction.
Deyaar announced in December that five of its projects in Dubai's Business Bay would be handed over in the first quarter of this year, including 1,092 residential and commercial units.
Deyaar will realise Dh1.2 billion in revenue when all the units in the five buildings are handed over, the company said. So far three of the buildings have been completed. The total of seven projects yet to be handed over raise question marks for anyone trying to evaluate the company's finances, Mr Riley said. "Until the handovers, they're not going to know the full extent of defaults," he said.The company replaced its chief executive Markus Giebel last April with Saeed al Qatami.