DUBAI (Standard & Poor's) April 13, 2011--Standard & Poor's Ratings Services takes a closer look at the current landscape in property markets in the Arabic-speaking countries of the Middle East and North Africa (MENA) in a report published today titled "Social Unrest Rattles Middle East And North Africa Real Estate Markets."

"Popular unrest and political upheaval in the Arabic-speaking Middle East and North Africa countries is putting a damper on regional property markets," said Standard & Poor's credit analyst Tommy Trask, "and many real estate projects planned or in progress in areas directly affected are subject to delays and cancellations."

Hardest hit are the leisure and high-end residential segments. In addition, some real estate companies are obligated to address damages to buildings, resulting from looting and violent demonstrations.

The unrest has reduced tourism flows into some countries and triggered sharp falls in hotel occupancy rates, for instance, in Egypt (Arab Republic of Egypt; foreign currency BB/Negative/B, local currency BB+/Negative/B) and Tunisia (Republic of Tunisia; foreign currency BBB-/Stable/A-3, local currency BBB/Stable/A-3). In our view, property investors will likely be wary of uncertainties linked to political transition or potential regime changes. Specifically, we see disputes about property titles as a mounting risk. In terms of property damages and losses due to business interruptions, we expect that the insurance industry will bear at least a portion of costs.

The strikes and transportation disruptions associated with the unrest will likely adversely affect local economies. At the same time, potentially higher cost of debt and increased government spending measures may weaken some governments' finances, in our opinion. We expect the ensuing negative impact on the real estate sector in Arabic-speaking MENA countries to be more acute in those countries already undergoing political transition, such as Tunisia and Egypt, and in those countries currently experiencing civil unrest, namely Libya (Socialist People's Libyan Arab Jamahiriya; ratings suspended), Bahrain (Kingdom of Bahrain; BBB/WatchNeg/A-3), Yemen (not rated), and Syria (not rated).

As they face the impact of popular protests and political transition, real estate companies in the region are also confronting other risk factors, such as supply/demand imbalances, affordability of property and lack of mortgage financing. In our view, much work also remains to be done in shaping legal and regulatory frameworks for real estate activity in the region.

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Standard & Poor's is the leading provider of financial market intelligence to customers in the Gulf's credit risk management, wealth management, and data and information markets. Since entering the region in the late 1980's, Standard & Poor's currently has public ratings on more than 100 issuers. In equity markets, Shariah-compliant versions of Standard & Poor's global and regional equity market indices - S&P 500, S&P Europe 350, S&P Japan 500 and S&P/IFCI GCC - have created new opportunities for Islamic investors to benchmark their international investments and for asset managers to create new investment products serving the Islamic community. Standard & Poor's Fund Services launched a qualitative fund management rating service for regional asset managers in 2007 assigning 17 Fund Management Ratings. For further details on Standard & Poor's regional capabilities please visit www.gcc.standardandpoors.com 

Primary Credit Analyst:
Tommy Trask, Dubai

Secondary Credit Analysts:
Kai Stukenbrock, Frankfurt
Karim Nassif, Dubai

Media contact:
Lisa Nugent
Communications
+44 20 7176 3501
lisa_nugent@standardandpoors.com

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© Press Release 2011