Dubai real estate market in 2023
Mar 13, 2023
By   Press Release
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Abstract: Outlook for rated Dubai real estate companies is stable.

DUBAI (S&P Global Ratings) - The outlook for rated Dubai real estate companies is stable, reflecting our expectation that growth will support strong cash flows, stable profitability and improved credit metrics, S&P Global Ratings said in a report released today.


The report, titled 'Dubai Real Estate Market 2023. Demand should withstand global economic pressures', is available on RatingsDirect.


"Increasing global economic pressures, including rising interest rates, inflation and depreciation of emerging currencies, are likely to cool demand for residential real estate. This will result in residential real estate prices stabilising in 2023," said Tatjana Lescova, credit analyst at S&P Global Ratings.


"Despite this, we expect real estate companies in Dubai to continue deleveraging and improve rating space in 2023. We also expect ample liquidity and limited capital requirements. Adequate cash flow leaves room for higher capital expenditure, dividends or acquisitions," Ms Lescova added.


Revenue growth for the property developer will come mainly from new and recent sales. Developers have good revenue visibility in the coming years thanks to their strong revenue backlog following strong pre-sales in 2021-2022.


Property operators will benefit from growing footfall and increasing numbers of international visitors, but also face the risk of reduced spending due to economic headwinds. Rents will continue to come under pressure due to new supply.


In 2023, Dubai's GDP will grow by around 3%, with annual inflation of around 3%, while the population will grow by 3%-4%. Supportive oil prices will maintain positive investor sentiment in the GCC region, while international tourism will continue to recover from the downturn in 2020.


This report does not constitute a rating action.