Dubai-based private developer Damac has reported strong off-plan sales with a sales backlog of 67 billion UAE dirhams ($18.3 billion) as of December 2024, which creates good revenue visibility over the next 2-3 years, Moody's Ratings said in a report.

The company has a track record of high pre-completion payment collections through real estate cycles, which helps fund construction without the need for project debt, it added. 

The rating agency upgraded to Ba1 from Ba2 the corporate family rating and to Ba1-PD from Ba2-PD the probability of default rating (PDR) of Damac Real Estate Development Limited, DIFC. 

The report said that Damac follows prudent financial policies, while targeting maximum debt-to-equity ratio of 50 percent.

According to Moody's, the developer manages liquidity for construction projects without reliance on external funding.

"This ensures that the completion of ongoing construction can be funded from customer prepayments on pre-sold units alone," it said.

The company has adopted a cautious land acquisition policy, keeping a land bank of only around two years of planned sales.

"We believe this is sufficient in Dubai, where new plots frequently become available for purchase, and reduces the requirement for debt-funded investments in land," the rating agency stated.

(Writing by P Deol; Editing by Anoop Menon) (anoop.menon@lseg.com) 

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