According to a report, developers are well-positioned financially in anticipation of the upcoming cyclical downturn.
S&P Global Ratings has predicted a cooling trend in Dubai’s residential property market over the next 12-18 months due to heightened supply and global economic pressures affecting demand, according to a recent report.
Nevertheless, developers in the emirate have bolstered their cash balances, thanks to record pre-sales over the past three years. This has resulted in an improvement in their credit health, positioning them well for the upcoming cyclical slowdown, as outlined in the report.
S&P highlights that over 85% of GCC-rated real estate companies maintain a stable outlook, signaling the anticipation of a consistent operating performance.
“Our portfolio is predominantly exposed to Dubai real estate, where stable outlooks (with only one positive) suggest limited upside potential in the next 12 months, aligning with our expectations of a cyclical slowdown.”
In contrast, the residential real estate market in Abu Dhabi has not undergone the same rapid appreciation observed in Dubai. Consequently, Abu Dhabi’s market has yet to reach its previous peak cycle, indicating a lower risk of reversal in comparison, according to the report.
