Dubai's property market could start to cool over the next 12 to 18 months amid the global economic pressures, but the emirate’s developers will be able to withstand the turn in the cycle due to their strong liquidity position, according to a new report.
“We expect developers to continue to accumulate cash and improve liquidity buffers in preparation for the next cyclical trough, given their off-plan pre-sales remain healthy,” S&P Global Ratings said on Monday.
“While developers' cash flow generation and credit metrics could weaken, ratings should be able to absorb the downside pressure, assuming the market correction is mild.”
Property prices in Dubai, the commercial and tourism hub of the Middle East, have risen at double-digit rates per year since 2021, driven by government initiatives and strong demand from buyers.
Dubai has been ranked as the world’s fourth most active market in the luxury residential segment amid higher property sales.
The emirate recorded the sale of 219 homes priced above $10 million last year, with the total value of the transactions reaching $3.8 billion, global property consultancy Knight Frank said in a report earlier this year.
Dubai ranks behind New York (244 sales), Los Angeles (225 sales) and London (223 sales).
The emirate registered a 40.7 per cent annual jump in the volume of residential sales valued at more than $10 million in the third quarter of 2023.
The volume of homes priced over $10 million in Dubai – the commercial and tourism centre of the Middle East – totalled more than $1.59 billion in the July-September period, according to Knight Frank.
As real estate prices continue to rise in Dubai, the risk of a cyclical reversal is mounting, S&P said.
It expects property prices to increase 15 per cent to 18 per cent in 2023 and by another 5 per cent to 7 per cent in 2024 as the Dubai market gradually slows down.
“We don't expect a profound market disruption. Instead, we think price increases could decelerate and potentially slightly reverse over the next 12-18 months, with price declines not exceeding 5 per cent to 10 per cent,” S&P said.
Developers will record strong cash generation and higher earnings before interest, taxes, depreciation and amortisation (ebitda) in the run-up to the next cyclical trough, according to the report.
“This will support further deleveraging and build a buffer for the next cyclical correction,” the rating agency said.
“The balance of power has shifted in favour of developers over the past couple of years. Therefore, we believe their credit quality should be more resilient to a softer price environment or fewer transactions.”
New property launches are expected to continue, despite the expected downturn, it said.
Developers “are also likely to launch smaller units since the price per square foot has become expensive and buyers are starting to downsize spaces. This contrasts with an earlier preference for larger properties following pandemic-related restrictions,” it said.
The rating agency said it already factored in the industry's cyclicality and the emirate's particularly volatile and sentiment-driven demand while assigning credit ratings to Dubai’s developers including Emaar Properties, Damac Real Estate Development and PNC investments, also known as Sobha Realty.
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The Facility’s Versatility
Between the start of the 2020 IPL on September 20, and the end of the Pakistan Super League this coming Thursday, the Zayed Cricket Stadium has had an unprecedented amount of traffic.
Never before has a ground in this country – or perhaps anywhere in the world – had such a volume of major-match cricket.
And yet scoring has remained high, and Abu Dhabi has seen some classic encounters in every format of the game.
October 18, IPL, Kolkata Knight Riders tied with Sunrisers Hyderabad
The two playoff-chasing sides put on 163 apiece, before Kolkata went on to win the Super Over
January 8, ODI, UAE beat Ireland by six wickets
A century by CP Rizwan underpinned one of UAE’s greatest ever wins, as they chased 270 to win with an over to spare
February 6, T10, Northern Warriors beat Delhi Bulls by eight wickets
The final of the T10 was chiefly memorable for a ferocious over of fast bowling from Fidel Edwards to Nicholas Pooran
March 14, Test, Afghanistan beat Zimbabwe by six wickets
Eleven wickets for Rashid Khan, 1,305 runs scored in five days, and a last session finish
June 17, PSL, Islamabad United beat Peshawar Zalmi by 15 runs
Usman Khawaja scored a hundred as Islamabad posted the highest score ever by a Pakistan team in T20 cricket
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Reading List
Practitioners of mindful eating recommend the following books to get you started:
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Manchester City 0
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Key facilities
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Creator: Jenna Lamia
Rating: 3/5
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England's lowest Test innings
- 45 v Australia in Sydney, January 28, 1887
- 46 v West Indies in Port of Spain, March 25, 1994
- 51 v West Indies in Kingston, February 4, 2009
- 52 v Australia at The Oval, August 14, 1948
- 53 v Australia at Lord's, July 16, 1888
- 58 v New Zealand in Auckland, March 22, 2018
Dr Afridi's warning signs of digital addiction
Spending an excessive amount of time on the phone.
Neglecting personal, social, or academic responsibilities.
Losing interest in other activities or hobbies that were once enjoyed.
Having withdrawal symptoms like feeling anxious, restless, or upset when the technology is not available.
Experiencing sleep disturbances or changes in sleep patterns.
What are the guidelines?
Under 18 months: Avoid screen time altogether, except for video chatting with family.
Aged 18-24 months: If screens are introduced, it should be high-quality content watched with a caregiver to help the child understand what they are seeing.
Aged 2-5 years: Limit to one-hour per day of high-quality programming, with co-viewing whenever possible.
Aged 6-12 years: Set consistent limits on screen time to ensure it does not interfere with sleep, physical activity, or social interactions.
Teenagers: Encourage a balanced approach – screens should not replace sleep, exercise, or face-to-face socialisation.
Source: American Paediatric Association
Killing of Qassem Suleimani
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COMPANY PROFILE
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Started: 2018
Founders: Roman Axelrod, Valentyn Volkov
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Industry: Smart contact lenses, augmented/virtual reality
Funding: $40 million
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'Of Love & War'
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UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
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Global state-owned investor ranking by size
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Killing of Qassem Suleimani
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
UAE currency: the story behind the money in your pockets
