Moody’s Forecasts Continued Strength in UAE Real Estate Market
Moody’s, the globally renowned credit rating agency, revealed on Monday that the real estate market in the United Arab Emirates (UAE) is projected to sustain its strength for the upcoming 12-18 months, despite an anticipated slowdown in demand compared to the preceding couple of years. Key factors contributing to this robustness include the UAE government’s effective visa enhancement scheme, a swift economic recovery post-pandemic, persistent high oil prices, and thriving economic activity.
Buy/sell, rent/lease residential &
commercials real estate properties.
Strong Credit Quality Amid Favorable Market Conditions
According to the investor service report of Moody’s, accessed by the Arab World News Agency (AWP), Emirati property development companies are positioned to preserve their strong credit quality courtesy of the prevailing market conditions. There has been a price surge of approximately 15% in Dubai and Abu Dhabi since Q2 of 2021, underlining the strength of the market.
Reduced Reliance on Banking Sector
The report also quoted Julian Haddad, Moody’s Vice President and Senior Analyst, emphasizing that enhanced operational environments have facilitated companies to diminish their dependency on the banking sector. The loans to the construction and real estate sectors have seen a drop of 6% in 2022 and a yearly 4% during the first half of the present year. The high demand has enabled companies to impose favorable terms on customers, particularly pre-delivery payment requirements.
Impact of Interest Rate Hikes Limited
Despite the rise in interest rates, the copious liquidity has allowed companies to persist in delivering units. Moody’s affirmed that the effect of interest rate hikes on property development firms would be confined in the short term. This is largely due to the fact that rated companies in the region boast of strong credit ratings, the majority of their debts are at fixed interest rates, and their maturities extend for at least four years.