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Deyaar to launch 11 new buildings and 750 apartments

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Deyaar

Deyaar plans to expand its Midtown master development at Dubai Production City (IMPZ) after seeing good demand for the first phase.

“We are launching an extension of Midtown next month and it will be worth Dh800 million,” Saeed Mohammed Al Qatami, chief executive of Deyaar.

Construction work on the first 13 buildings has just been completed and handover is expected this month.

“We launched zones two and three and sold all 1,200 apartments, except for retail and a small building of 80 apartments — we kept them in our real estate portfolio,” said Al Qatami. “We are now opening zones four and five, consisting of 11 building and 750 apartments. Zones one and six will be for future development.”

He added that zones two, three, four and five make up 92 per cent of the project.

The Midtown development, which the developer said caters to the affordable housing segment, consists of 25 buildings offering studio, one- and two-bedroom apartments. It features a 1km running track, tennis courts, a basketball court, swimming pool and children’s play areas. The overall cost of the project is around Dh2.6 billion.

High returns

After Midtown, Deyaar also has a residential project in the pipeline, Bella Rose at Dubai Science Park in Al Barsha South. Construction work on the 18-storey building has now reached the 10th floor, and handover is expected by December next year.

“Bella Rose has reached 50 per cent completion, and we still have some units left there. The project offers the potential to earn up to 13 per cent in return on equity,” noted Al Qatami. “Although there is an oversupply in the market, there is still demand for residential properties. You have to launch the right product in the right location.”

According to Al Qatami the first phase of Midtown is being financed with a mix of debt and equity.

“The handover payments for the 13 buildings will be coming from December, so there will be enough equity from the proceeds of this, and therefore, the debt ratio [for this project] will not be that high.”

Commenting on the UAE Central Bank’s proposed regulation that seeks to cap lending to real estate companies to limit banks’ exposure to the sector, Al Qatami said it was a positive move, but that there should be a differentiation between companies.

“Today there are real estate companies that have borrowings of more than Dh10 billion, and there are others that have a few hundred million worth of exposure, so you cannot say all real estate companies have huge exposure,” said Al Qatami. “At Deyaar, we have very low levels of debt, about Dh400 million, and that’s going to be paid by the projects.”

Expanding into hospitality

With Expo 2020 fast approaching, Deyaar has expanded into the hospitality sector with three projects: Millennium Atria Business Bay that opened early last year and offers serviced apartments; Millennium Al Barsha hotel, which opened last week; and Mont Rose, a three-tower complex at Dubai Science Park offering a mix of residential and serviced apartments since last year.

In its first year of operation, Millennium Atria Business Bay has seen an average occupancy rate of 86 per cent, the hotel’s manager, Ziad El Hawi, told Property Weekly, adding that most residents are businesspeople and families from the GCC.

Altogether, Deyaar now has 952 keys in its hospitality portfolio and anticipates roughly Dh1 million in revenue from each key, or a total of about Dh100 million in the first year.

“We’re expecting around Dh100 million in revenue from our hospitality business by 2020. We believe the market will be in a much better situation next year [when] visitor numbers will increase. We’re looking to double the number of keys by 2024-25, depending on the demand,” Al Qatami said.

In August, Deyaar reported a 27 per cent decline in its profits for the second quarter as operating costs jumped and the company incurred provisions against claims.

Provisions totalling Dh661 million made in 2018 was one of the prime reasons behind the company’s accumulated losses of Dh1.54 billion, the Dubai Financial Market-listed company said in October.

Deyaar has also extended its reach to facility management services, which could prove a key revenue generator going forward given the rate of handovers.

Source: Business Line

(Note: The story has been published without modifications to the text. Only the headline and intro have been changed.)

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