Deyaar Development PJSC said it would set up a 500 million dirham ($137 million) fund to buy back distressed property sold to investors who can no longer pay for their purchases.
Markus Giebel, the chief executive of the big Dubai-based property developer, said the company will seed the fund with AED100 million, and seek investors for the remainder of the capital, which he says Deyaar has almost finished raising.
The fund will offer to buy up distressed properties from investors who have defaulted on their real-estate purchase agreements with Deyaar. But instead of selling the property off in today's distressed market, Deyaar plans to hold onto the units and offer them for rent, providing cash flow for the company. When property prices recover in Dubai, the fund will then sell the units off again, he said.
Mr. Giebel said the fund's returns are modeled on a forecast recovery of Dubai's property market in three to four years time. In recent months, Dubai property prices have tanked, some falling more than 50% amid today's global economic downturn, a glut of supply and tight local lending requirements.END
Nice move for Government,but sad move property owners.
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