Dubai's Deyaar eyes overseas expansion to diversify

Original source Reuters

Dubai property developer Deyaar is considering international expansion for the rest of the year to diversify its portfolio and take advantage of cheaper land prices, its chief executive said on Sunday.

The emirate's second largest real estate firm by market value is looking at opportunities in six to seven countries, including Saudi Arabia and Lebanon, Markus Giebel told Reuters in an interview.

"Now, it is a wonderful time to foster international expansion," said Giebel. "The land is either contributed through a joint venture partnership or it's cheaper than before."

Giebel ruled out investments in developed countries and said it would focus more on villa developments rather than high-rise towers as there was less risk involved.

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It was also eyeing opportunities in some "higher risk countries", he said, but declined to identify them.

Property and construction firms are increasingly looking outside Dubai to drive business after a sharp decline in the emirate's property sector that has led to billions of dollars worth of construction projects being scaled back or cancelled.

Saudi Arabia's booming construction sector offers some of the best opportunities, Giebel said.

"There's intrinsic demand for Saudi. Two years ago if I had to go to Saudi (Arabia) I had to pay top dollar for the land," said Giebel.

The kingdom needs 1 million new houses by 2014 amid shortages in residential, commercial, retail and hospitality property in Riyadh, Jeddah, Mecca, Medina and the Eastern Province, HSBC said in a report earlier this week.

Partners in most countries have been identified, he said, but the company was still negotiating "the best deals".

Through a joint venture with Lebanon-based real estate company Solidere, Deyaar this month handed over its first luxury project in Lebanon.

Deyaar has invested more than $200 million since 2005 in Lebanon, it said in a statement. Going forward Solidere would be its "preferred choice" for a partner, Giebel said.

Giebel declined to give a forecast for second-quarter profit, but said the firm expected 2009 figures to be in line with 2007. It posted net profit of 540 million dirhams in 2007 and 1.1 billion dirhams in 2008.

"Although profits will go down from 2008 they will still be profits ... 2008 was a fantastic year, but if you hit the jackpot once, you don't hit it every year," Giebel said.

The company has a debt-equity ratio of 7 percent, he added.