Damac axes 200 jobs as crisis hits property sector
Dubai, November 11, 2008
Damac Holding, Dubai's largest private property developer, said on Tuesday it was cutting 200 jobs, or 2.5 per cent of its workforce, as the global credit crisis begins to hit the Gulf's real estate sector.
Damac Properties, which has projects worth about $30 billion across the Middle East and North Africa, said in a statement that the job cuts would come in its sales, marketing and recruitment departments.
'As a competitive business, the Damac Group has to ensure that it maintains its staffing levels according to market conditions - both good and bad,' chief executive officer Peter Riddoch said, adding all companies would need to review staffing levels and recruitment needs due to the financial crisis.
Emaar Properties, the region's largest property developer by market value, declined to comment on whether it was planning to cut staff.
'Kindly note that Emaar has advised that they have no comment on this at present,' Emaar's media relations team said in a statement to Reuters.
The UAE faces a slowdown in loan growth and real estate activity as it grapples with the fallout from the global financial crisis.
'As an international developer, we cannot expect to be unaffected by the downturn in countries like the UK,' Riddoch said.
Damac's announcement is the first public admission from a Dubai company that the emirate's thriving real estate sector may have hit its peak.
'There is a decline in jobs. I think its cautiousness at this stage,' said Ahmad Waarie, general manager for Watson Wyatt in Dubai, a consultancy firm that provides human resources advice to about 750 Gulf companies.
'In the real estate sector, it is really obvious. There are lay-offs. Dubai is typically the fastest to react, so we are seeing more across Dubai; but it is also leading the way for the Gulf.'
Most of the lay-offs are in mid-level technical positions, he said.
Lloyds TSB Middle East said in a statement on Monday that it had stopped granting mortgages for apartments in the UAE and would require a 50 per cent downpayment for villas due to 'exceptional market conditions'.
Emaar Dubai chief executive Issam Galadari told Reuters on Friday it was giving customers more time to repay mortgages.
Galadari said liquidity constraints at local banks had exacerbated the problems of securing home finance.
Mohamed Alabbar, Emaar's chairman, said earlier this week that growth in the emirate's real estate sector could slow to 9 per cent from 13 per cent due to the global downturn and that the Gulf's commercial hub had set up a committee to boost confidence in the real estate market.
'I think you will see a lot of sales staff and real estate agents dropping off because of the number of transactions beings reduced due to the financial crisis,' said Tim Rose, senior real estate fund manager at Emirates Investment Services.
'There is still a number of buyers out there, but the lack of financing is making it difficult for them.'
Real estate stocks led a slump in UAE markets on Tuesday, with Emaar sliding almost 10 per cent to a 47-month low. Deyaar, Union Properties and Sorouh Real Estate all closed more than 9 percent lower.-Reuters