S&P Global Ratings has downgraded the credit rating of three Dubai real estate companies – Emaar Properties, Emaar Malls and DIFC Investments - due to increased economic pressures from the spread of COVID-19.
UAE’s largest property firm, Emaar Properties, was downgraded to BB+ from BBB- with a negative outlook.
The ratings agency expects weakening across Emaar Properties’ business segments this year due to the economic slowdown from the spread of COVID-19 that will likely lead to material deteriorations in the company’s credit metrics, it said in a report.
Emaar Malls, owner and operator of the world's largest shopping centre, Dubai Mall was also placed on BB+ from BBB- with a negative outlook as it expects the performance of the retail sector to be weak.
S&P has also cut the rating of DIFC Investments to BB+ from a BBB- score.
“The supply-demand imbalance in the realty sector, appears to have been exacerbated by the pandemic. We now expect to see international demand for Dubai's property to be subdued, and the fall in residential prices to be steeper than we had expected lingering well into 2021,” S&P said.
The ratings agency expects Dubai’s GDP to shrink by about 11 percent in 2020 and forecasts a recovery to 2019 levels of nominal GDP in 2022.
“We expect Dubai's open economy to suffer a significant shock from the COVID-19 pandemic. Based on publicly available information, Dubai's economy relies heavily on retail, logistics, tourism, and real estate, which we expect to only partly recover by 2021,” it said.
(Reporting by Gerard Aoun; editing by Seban Scaria)
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