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Deyaar Development Cuts Staff by 20 Per Cent as Property Woes Mount

DUBAI - Deyaar Development disclosed on Monday that it has reduced its workforce by one-fifth to cut costs, in a sign of lingering uncertainty in Dubai's property sector.

Deyaar, which had about 300 employees before the cuts, announced the layoffs to the Dubai Financial Market. The real estate company said that the cuts were in line with its commitment to align its resources with its requirements.

“Following the recent consolidation of resources at Deyaar, we currently have no intention of carrying out any further reduction in staff numbers,” Deyaar Chief Executive Officer Markus Giebel told Khaleej Times.

Deyaar told the Dubai Financial Market that the 20 per cent cull in its staff was one of several steps it has taken since the beginning of the global financial crisis. Deyaar revealed last week that its third-quarter profit had plunged by 74 per cent year on year to Dh8.16 million, due largely to poor sales.

In its statement to the bourse, the developer said that “this rationalisation of resources has been carried out to support Deyaar’s sustained growth and maintain its commitments to customers, partners and shareholders in the most efficient possible manner.”

Giebel, in his emailed statement to Khaleej Times, said that Deyaar still has the “ability to achieve quarter-on-quarter earnings progression despite the challenging economic conditions facing businesses worldwide.”

Deyaar’s shares advanced by 2.4 per cent on Monday to Dh0.85.

“Deyaar’s news isn’t negative. We all know the real estate sector is going through a consolidation phase,” said Ali Khan, managing director at brokerage Arqaam Capital Limited. “Real estate companies have to respond to the changing environment that they are operating in, it was just logical that this will lead to some joblessness 
in some companies.”

Deyaar’s move to lay off some of its employees will bode well for the company in the long-run, added Haissam Arabi, Chief Executive Officer of Gulfmena Alternative Investments.

“We have seen even bigger layoffs in bigger companies like Emaar and Nakheel,” Arabi said. “In a downturn, it is only natural for companies to keep a close eye on cost and to eliminate resources that you don’t need.”

Deyaar said in February that it had put on hold one- quarter of its projects in response to the slowdown in Dubai’s once-booming property market. Deutsche Bank in June forecast that property prices in the emirate would slide by a further 20 per cent by year’s end.