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Dubai’s largest developer Emaar Properties has cut executive and staff salaries across its businesses as the coronavirus pandemic halts projects and weighs on revenue from malls and hotels, reported Bloomberg.
The changes took effect on April 1 for all of Emaar’s Dubai businesses and will continue until further notice, stated the report, citing a letter sent by Chairman Mohamed Alabbar to employees.
Under this arrangement, Alabbar has forgone his salary, while the senior management will take a 50 per cent cut followed by middle management with a 40 per cent cut and junior staff 30 per cent.
There will be no pay cut for support staff working full time; staff not currently operating/on leave will receive full accommodation and healthcare as well as 15 per cent of their cash salary, while other businesses will receive 60% of full salary, it added.
Dubai's property market has struggled in the past decade due to fallout from the global financial crisis and weak oil prices that left the emirate oversupplied with homes and offices.
In the latest knock to the economy, the global virus outbreak prompted Dubai to propose a one-year delay to Expo, a major event it was due to host from October.
Emaar has suspended work on major projects in Dubai, as the coronavirus pandemic exacerbates a real estate slowdown in the business hub, reported Reuters citing sources familiar with the matter.
Already projects have been suspended at Dubai Creek Harbour, a new development touted as offering homes to 200,000 people, sources said.
That included suspending work on the Dubai Creek Harbour Tower, billed as being higher than Dubai's Burj Khalifa, which is now the world's tallest building, the sources added.
Emaar was up 4.7 per cent as of 11:48 a.m. in Dubai. The stock is down 44 per cent this year, exceeding the 38 per cent decline of the Dubai Financial Market General Index. Emaar has the third-highest weighting in the 37-member index.
It is now among the developers in the Middle East’s business and logistics hub being forced to rethink projects as the pandemic and the oil-price collapse squeeze finances, reported Bloomberg.
The coronavirus is aggravating a long property slump in Dubai, where oversupply and economic uncertainty have pushed down prices for years, it stated.
The developer of the world’s tallest tower built a large portfolio of cash-generating assets such as hotels and malls to carry it through tough times for property sales. Now that revenue is drying up as strict social distancing rules implemented to curb the virus’s spread closes its malls and empties its hotels, it added.
Yesterday, Emaar sold 80 per cent of its Downtown Dubai district cooling business to Tabreed for $675 million. Tabreed’s biggest shareholder is French utility Engie.