Dubai’s real estate sector will remain stable in 2023 despite global economic headwinds, according to S&P analysts.
The international credit ratings specialists say growth will support strong cash flow, steady profitability, and improving credit metrics in a new report.
S&P Global Ratings credit analyst Tatjana Lescova said:
“Mounting economic pressures globally, including rising interest rates, inflation, and the devaluation of emerging currencies, may cool the demand for residential real estate. This will lead residential real estate prices to stabilise in 2023.”
“Nevertheless, we expect continued deleveraging and improving rating headroom for Dubai-based real estate companies in 2023.
“We also expect ample liquidity and limited funding needs. Plentiful cash flow leaves headroom for higher capital expenditure, dividends, or acquisitions”.
Real estate operators will benefit from rising footfall and a growing number of international visitors, but face the risk of reduced spending due to economic headwinds.
Rents will remain under pressure due to new supply.
Dubai’s GDP will expand by about 3% in 2023, with modest annual inflation of about 3%, according to S&P Global Ratings.
At the same time the population will grow by three to four per cent. Supportive oil prices will sustain positive investor sentiment in the GCC region, while international tourism will continue to recover from its 2020 trough.
Real estate developers’ revenue growth will mainly come from new and recent sales. Developers have good revenue visibility for the next couple of years, thanks to their robust revenue backlogs following strong presales in 2021-2022.
This column does not necessarily reflect the opinion of overwrite.ai and its owners.
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