UAE Real Estate Sector To Face Another Tough Year In 2017 Says Report
Dubai - United Arab EmiratesThursday, February 16, 2017
Middle East Today
Responsive web sites
A News Portal for Visitors and Residents
MENA Private Equity Association
Middle East Post Box
Press Release Network
The United Arab Emirates' (UAE) real
estate sector faces another difficult year after a correction in 2016, S&P
Global Ratings said in a report published today, "Another Tough Year For UAE
Real Estate Market Amid Currency Woes."
With the fallout from low oil prices and continued currency woes, it is no
surprise that 2016 was a tough year for the real estate market. Dubai's
residential prices dropped by 8%-11% on average and rent fell by 6% according
to REDIN.com, with most areas of the city affected. The strength of the dollar
is also making the UAE increasingly expensive for tourists and low oil prices
in 2016 have diminished purchasing power and weakened investor sentiment.
The pound declined by 17% versus the U.S. dollar in the past 12 months due to
Brexit fears. The evolution of the pound remains a concern for the UAE as the
U.K. is traditionally among the top three source markets for visitors to
Dubai, and U.K. nationals were the fourth largest investor in residential real
estate in the first half of 2016.
For 2017, we see no signs of market improvement for the UAE real estate
sector, despite housing affordability improving from the current price
environment. We expect residential prices and rents to fall by another 5%-10%
in Dubai in 2017.
However, we do not foresee major negative movements in our real estate sector
ratings in the next 12-18 months as we think developers will be able to absorb
the fall in house prices due to low debt burdens and strong balance sheets.
Rated real estate companies are also hedged somewhat due to their high asset
quality and long-lease structures.
Only a rating committee may determine a rating action and this report does not
constitute a rating action.