(Bloomberg) --
One of Dubai’s smaller developers is making a big bet that the city’s battered property market will soon be back to business after the shock of the coronavirus pandemic.
About a month after the lockdown eased, the chief executive officer of privately-owned Azizi Developments, saw a rebound in property inquiries and sales. Now he’s preparing for a rebound and hiring almost 100 employees as he seeks to sell properties in 54 apartment buildings under construction. Expanding at this time wasn’t an easy decision.
“We were split” and didn’t know if we should grow or shrink the team, said Farhad Azizi, whose father Mirwais Azizi, a prominent Afghan businessman, started the company in 2007. “My father said: ‘Let’s go bigger because there is a lot of talent in the market.’ And when the new joiners came in our sales picked up.”
As the coronavirus wreaked havoc on the global economy it also aggravated Dubai’s property slump where oversupply has pushed prices lower for the past six years. Now, with companies like Emirates airline laying off staff and some estimating Dubai’s population could shrink by 10%, the downturn is likely to further reduce rents and the of homes.
Emaar Projects
Other developers aren’t as bullish. Emaar Properties PJSC, Dubai’s biggest developer, halted some projects at Dubai Creek Harbour, including the five-star Creek Palace hotel. Moody’s Investors Service Inc. projects a 4.9% contraction in Dubai’s non-oil gross domestic product this year.
Azizi, whose billboards plaster the sides of highways with promises of “affordable luxury” and a price tag below 1 million dirhams ($272,000) on most properties, says much of the demand is coming from Dubai residents who no longer want to rent. Inquiries are also trickling in from India, Pakistan, Nigeria and Saudi Arabia. Still, sales of four-to-five a day are about half of what they were before the virus struck, and they take longer to complete.
Even when Dubai was on full lockdown due to Covid-19, Dubai’s land Department continued registering property transactions digitally, with 1,808 in April. The of sales during the first five months of 2020 dropped by 19% from a year earlier, land departments data shows.
Sukuk Plans
Azizi, with 600 employees, is even looking at new projects and wants to start testing the waters in September, with the third phase of its Riviera development in Dubai - as long as there is no second wave of virus shutdown.
The company is seeking to revive an Islamic bond sale it was forced to delay this year and sell around $300 million in sukuk early in 2021 to help fund the construction of phase 3 and 4 of that project, the CEO said.
The developer, which has over 12,000 homes under construction, is focusing on selling the 2,475 that haven’t found buyers yet and delivering 3,000 properties this year.
As the pandemic hit, Azizi reduced the salaries of employees by around 25%, but didn’t cut jobs. The company, which went through a restructuring last year, is hiring engineers, quantity surveyors and sales staff with a goal of adding 100 employees before the end of July.
©2020 Bloomberg L.P.
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