Postcard From Dubai

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Dubai's global real estate hotspot tag is rock solid but after a limp-biscuit performance in 2020 (the rare event in which half the biscuit melts and stays back in the cup), the sector's recovery looks uneven. 

Here are the key takeaways from S&P Global's latest Dubai report card.

⛳ So far this year, residential real estate prices in Dubai have been rebounding strongly from a record low at end-2020 on the back of pent-up demand from both international and local buyers. 

⛳ Dubai's real estate sector will likely benefit from the World Expo 2020, which started a year late this October due to the pandemic. 

However, structural oversupply of residential properties will challenge price increases over the long term, making the recovery fragile.

⛳ Higher presales will contribute to stronger revenue for the real estate developers over the longer term. Secondary inventory is looking at a cooler reception. 

That said, over 2021-22, developers might see improved credit metric headroom for the current ratings, thanks to stronger cash flow from inventory sales. 

⛳ Pressure on rents in the oversupplied retail and office segments will persist, meaning mall and office space operators continue their voyage into oncoming winds. 

Hotel operators' recovery will be sluggish given that international tourism or work related travel won't regain momentum before 2022 or later.