S&P Sees Tough Years for Dubai Property, 11% GDP Crunch on Covid

Follow us@middleeast for more news on the region.

Dubai’s economy will likely suffer a “significant shock” this year as the coronavirus pandemic and its consequences weigh on most sectors in the Middle East’s business hub, according to S&P Global Ratings.

S&P also stripped the city’s best-known real-estate developer of its investment-grade credit rating. Gross domestic product in the emirate will shrink about 11% this year, and will only recover to last year’s nominal growth levels in 2022, S&P said in astatement Thursday.

S&P cutEmaar Properties and its subsidiaryEmaar Malls from BBB-, the lowest investment grade, to BB+ and signaled that more downgrades may come. DIFC Investments Ltd. was also cut to BB+, though S&P’s outlook on its rating is stable.

63,247 in U.S.Most new cases today

-7% Change in MSCI World Index of global stocks since Wuhan lockdown, Jan. 23

-1.​122 Change in U.S. treasury bond yield since Wuhan lockdown, Jan. 23

4.​4% Global GDP Tracker (annualized), June


“We now expect to see international demand for Dubai’s property to be subdued, and the fall in residential prices to be steeper than we had expected, lingering well into 2021,” S&P analysts including Timucin Engin wrote.

Dubai relies heavily ontourism and real estate -- two of the sectors most hard-hit by the pandemic. The city, part of the United Arab Emirates federation, now faces a deeper economic contraction than the decline it experienced during 2009, when it had to seek financing from oil-rich neighbor Abu Dhabi.

Business conditions showed signs of picking up in June as the UAE began to reopen its economy, but global travel restrictions, “including suspension of most international passenger flights and social distancing constraints, will continue to significantly weigh on Dubai’s tourism and hospitality sectors,” S&P said.

S&P expects Dubai’s economy to rebound about 5% in 2021, but then predicts growth will slow to 2% through 2023 amid subdued demand in the Persian Gulf region and relatively low oil prices.

Source: Read Full Article