Global air traffic will not return to pre-COVID-19 levels any time soon, but Expo 2020 Dubai is a reason to be ‘more comfortable’ about the emirate’s tourism prospects over the next six months, according to global ratings agency S&P.
GCC region is reliant on aviation to bring tourists, lower traffic volumes globally will mean tourism and hospitality occupancy levels will remain lower, the ratings agency said.
“We feel a bit more comfortable about Dubai in this case, that is largely due to Expo,” said Timucin Engin, senior director and cross practice, country coordinator, GCC region, at a webinar on Wednesday.
“We don’t think that it will allow the volumes to recover to pre-COVID-19 levels, but it will definitely provide some support to the tourism operators in the city.”
S&P’s report, Spotlight on Emerging Markets, Focus on Middle East and North Africa, showed that Dubai was rated ‘high’ on the agency’s sensitivity matrix for tourism and hospitality sector, compared with ‘very high” for the others rated in the GCC - Abu Dhabi, Saudi Arabia, Qatar, Kuwait, Oman and Bahrain.
All were rated ‘very high’ for sensitivity in aviation and were rated ‘limited’ in terms of sensitivity for the telcos sector.
Real estate risk
The region’s real estate sector has been ‘faring better’ over the past few months, but the commercial and office sectors are still under pressure, Engin said.
“In Dubai we are seeing definitely a price recovery, but that price recovery is on the back of pent up demand from quite depressed levels.”
However, there were still questions about sustainability due oversupply in the market, he said.
“Every price recovery period in the market has generally been followed by a sharp increase in supply from the developers, so this finally ends up reflecting in the price. This is definitely a key risk to look at,” he added.
(Reporting by Imogen Lillywhite; editing by Daniel Luiz)
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