Report says developers are in a strong financial position leading up to the next cyclical downturn.
S&P Global Ratings predicts that Dubai’s residential property market will undergo a cooling phase in the next 12-18 months due to a surge in supply and global economic pressures impacting demand. Despite this, developers in the emirate have bolstered their cash reserves thanks to record pre-sales in the past three years, thereby enhancing their creditworthiness in anticipation of the forthcoming cyclical slowdown. The report highlights that more than 85% of GCC-rated real estate companies maintain a stable outlook, indicating expectations for consistent operational performance. Approximately two thirds of the portfolio is exposed to Dubai real estate, where stable outlooks (with only one positive) suggest limited potential for upside in the next year, considering the anticipated cyclical deceleration. In contrast, Abu Dhabi’s residential real estate market has not witnessed the same rapid appreciation as Dubai, implying that it has yet to reach its previous peak cycle, thereby indicating a lower risk of reversal.
