Dubai's Deyaar to start developing in 2010

Deayaar Properties chief executive officer Markus Giebel speaks during the Reuters Middle East Investment Summit in Dubai, October 27, 2009.

DUBAI (Reuters) - Dubai developer Deyaar DEYR.DU, which on Monday announced it had cut 20 percent of its workforce, said it will re-start developing projects in 2010 and set up co-investment funds for its overseas expansion plans.

"2009 was a development holiday. In 2010 we have to start developing again," Markus Giebel, the firm's chief executive told the Reuters Middle East Investment Summit on Tuesday.

Dubai's second-largest listed developer, which plans to double the size of its property portfolio over the next five years, has handed over seven projects to investors in the third quarter and committed to six more in 2010, it said earlier in October.

Giebel said on Tuesday he hoped to close the firm's 500 million dirham ($136.1 million) distressed debt fund by the end of the year and would "attempt" to launch a co-investment fund in 2010 of similar size.

The firm is looking at several expansion opportunities across the Middle East, including Saudi Arabia and Lebanon, but would take its time in identifying projects, he said.

"The shelf life of a product in 2008 was two to four days. Now the shelf life is six to twelve months so we have all the time in the world to make a decision," he said, adding the firm had over 500 million dirhams of cash to spend.

"100 million dirhams investment goes a long way ... 100 million dirhams gives you a billion dirhams of development in a joint venture structure."

Deyaar, which once focused primarily on high-rise buildings, is shifting its focus to villas and low-cost housing.

"The next big thing is hands-down low cost housing ... there are 90 million people in the Middle East who are eligible for low-cost housing."

"A developing country needs a middle class. A middle class can't afford a million dollar apartment in the Marina. The transition of the UAE to middle class is imperative," he said.

Giebel said the property market in Dubai had reached a bottom.

"If we look back at history, in Singapore it took two to two-and-a-half years to find a bottom, but then the recovery was V shaped ... Hong Kong was different ... Dubai is more similar to Singapore."

Dubai's once-booming property sector has been hit hard by the global financial crisis as developers slow or cancel projects and jobs are slashed.

Property prices, down around 50 percent from their peaks, have been under pressure since late last year when the financial crisis and a slump in oil prices ended a six-year economic boom in the Gulf region.

Prices in the emirate are expected to fall a further 10 percent in 2009 with the decline continuing into 2010, a Reuters poll showed earlier in October.

Deyaar reported a 74 percent drop in third-quarter profit earlier in October, as the global economic crisis and subsequent property slump tool a toll on revenue.

(Additional reporting by Raissa Kasolowsky, Rachna Uppal and Chris Wickham; Editing by Rupert Winchester)

($1=3.673 Uae Dirham)