DUBAI (S&P Global Ratings) --The outlook for rated Dubai-based real estate companies is stable, reflecting our expectation that growth will support strong cash flow, steady profitability, and improving credit metrics, S&P Global Ratings said in a report published today. The report, "Dubai Property Market 2023: Demand Should Hold Up Against Global Economic Pressures", is available on RatingsDirect.
"Mounting economic pressures globally, including rising interest rates, inflation, and the devaluation of emerging currencies, may cool the demand for residential real estate. This will lead residential real estate prices to stabilize in 2023," said S&P Global Ratings credit analyst Tatjana Lescova.
"Nevertheless, we expect continued deleveraging and improving rating headroom for Dubai-based real estate companies in 2023. We also expect ample liquidity and limited funding needs. Plentiful cash flow leaves headroom for higher capital expenditure, dividends, or acquisitions," Ms. Lescova added.
Real estate developers' revenue growth will mainly come from new and recent sales. Developers have good revenue visibility for the next couple of years, thanks to their robust revenue backlogs following strong presales in 2021-2022.
Real estate operators will benefit from rising footfall and a growing number of international visitors, but face the risk of reduced spending due to economic headwinds. Rents will remain under pressure due to new supply.
Dubai's GDP will expand by about 3% in 2023, with modest annual inflation of about 3%, while the population will grow by 3%-4%. Supportive oil prices will sustain positive investor sentiment in the Gulf Cooperation Council region, while international tourism will continue to recover from its 2020 trough.
This report does not constitute a rating action.
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Contact:
Prerna Agarwal
Senior Consultant
Hanover Middle East
pagarwal@hanovercomms.com
www.hanovercomms.com
