Deyaar reports Dh75.4m profits

Deyaar Development, the Dubai-based property developer, has reported net profits of Dh75.4 million (US$20.5m) in the second quarter, down 69.5 per cent from the same period in what the company described as an "exceptional" 2008. Markus Giebel, the chief executive, said Deyaar's profitability had returned to 2007 levels and would continue on that course for the rest of the year. The profits for the three months to June were 38 per cent above the previous quarter. In the past eight months, Deyaar has devised ways to help property buyers consolidate their purchases or find ways to afford their payment plans. Described by one analyst as the "market leader" in the sector because of its proactive strategy to reduce defaults, Deyaar has also created a distressed asset fund so it can take over a property if a buyer defaults. This helped maintain a positive operational cash flow, Mr Giebel said. The fund had already received Dh100m each from Deyaar and Dubai Islamic Bank, and is seeking to raise another Dh300m more from regional investors, he said. Bobby Sarkar, an analyst at Al Mal Capital, said the earnings were in line with expectations and showed the effects of the drop in sales and prices since last autumn. But the fact that Deyaar made progress in the first half of the year showed it was "on the forefront in Dubai in terms of what they have done with their portfolio", Mr Sarkar said. "They are being more proactive, versus Emaar or Union Properties," he said. "They are coming to terms with reality in this market." A year ago, Deyaar was facing major challenges with the onset of the global financial crisis and a corruption inquiry that led to its chief executive being arrested on charges of financial impropriety. Since then, the company has rebranded, shifted management and put a strategy into play that would "safeguard Deyaar's future", Mr Giebel said. Revenue in the second quarter was Dh402m, while total assets stood at Dh11.3 billion, the company said. It delivered five projects in the second quarter and plans to deliver several other buildings, including the Citadel in Business Bay, by the end of the year. Deyaar's share price shed Dh0.01 in trading before it released its earnings figures yesterday, closing at Dh0.70. The company's shares have risen by 40 per cent since the start of the year. bhope@thenational.ae