RAK Properties will pay a dividend despite falling sales and board objections, after shareholders pressured management, the chief executive said yesterday. The company, the main developer in Ras al Khaimah, reported its first-quarter earnings fell nearly 39 per cent to Dh70 million (US$19m) compared with the same period last year. It attributed the drop to a lack of sales in the reporting period. "In general, property buying has come to a halt and we did not achieve any sales during the first three months of 2009," said Mohammed al Qadi, the chief executive of RAK Property. But Mr al Qadi said a dividend would be paid. "The dividends were not recommended by us as a board and as a management, and we objected to it but our shareholders put us under pressure. When they saw that we had cash, they voted for it." Analysts warned the payment could put the company under financial pressure. "They made no additional sales so all you are seeing now is cash outflows," said Chet Riley, an equity analyst at Nomura International. "They have around Dh689m cash resources. By giving out Dh150m as a cash dividend, they are burning about 25 per cent of their available cash." Cash flow is one of the main issues for property developers because sales stall but fixed costs remain. Mr al Qadi said that in order to finance continuing projects, such as the mixed-use Mina al Arab in Ras al Khaimah, he would need to raise money through syndicated loans or sukuk. "We are also keeping 25 per cent of all of our developments for rent or for our own use," he said. Property prices across the UAE have fallen since September last year. Because many buyers have stopped paying their instalments, developers are now finding different strategies to get access to liquidity and keep customers in the payment plan. Along with dropping their prices and extending payment plans, consolidation of payments has become another popular option. Emaar Properties, the country's largest developer, said yesterday it was offering customers credit notes instead of refunds to deal with its bad assets. Naaman Atallah, the chief operating officer at Emaar, told Emirates Business yesterday that clients would be allowed to swap their investments for other Emaar properties. "In offering these credit notes Emaar is offering investors options," Mr Riley said. "It is another way of defining consolidation around the portfolio." Emaar posted a surprise fourth-quarter loss due to heavy US write-downs. Credit notes and consolidation are also being seriously considered by developers elsewhere in the country. Rakeen, the property development arm of the RAK Government, which is developing the Dh1bn Bab al Bahr man-made island project, said buyers who bought several properties would be allowed to transfer their purchases only if they continued payments. Another option for developers is to sell assets. Union Properties, a Dubai-based private property developer, recently announced it was planning to sell non-core assets, including its district cooling business. "Clearly there is a need for future funding," Mr Riley said. "All of these businesses have cash constraints in the current market. Regionally, all the developers are facing the same dilemma. Liquidity is key." ngillet@thenational.ae