• S&P projects a 10-20 per cent correction in Dubai property market
  • Dubai’s apartment transactions down 1.5 per cent so far this year
  • Abu Dhabi prime office rents have increased by 3 per cent over the first quarter this year after remaining flat throughout 2014

US ratings agency Standard & Poor’s (S&P) has released a statement part of report published on 22 June saying additional supply with a dampening on demand in the UAE property market is likely to result in a moderate 10-20 per cent correction.

Despite this, S&P says this contraction is “much less than what led to the Dubai crisis in 2009”.

Retail and office commercial real estate should prove more resilient than hospitality given the sizeable supply of hotel rooms expected in anticipation of Expo 2020, according to the report.

“We believe real estate companies in the UAE are better armed to deal with the current slowdown and should be able to absorb it with limited ratings impact,” said S&P’s credit analyst Franck Delage, in the report.

Earlier this year, MEED reports that Dubai’s real estate market was set for slow 2015. The dynamics created by low oil prices and a strengthening dollar have added to the supply and demand strain that is expected to play a major role in the markets slowdown.

Further to this, Abu Dhabi’s office market remains very dependent on the hydrocarbons industry, with oil companies dominating top-end office space in the capital. However, as the oil sector continues to suffer at the hands of falling global prices, the emirate’s main oil companies, many of which are state-owned, may begin to scale down operations. If this happens, it is likely to affect the market as a whole.

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GCC Projects Market Report 2015

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The outlook for the projects market in the GCC is uncertain. Oil prices have fallen by half since June 2014, putting increased pressure on government finances. This has led to a review of spending priorities across all the GCC markets.

As a consequence there is huge uncertainty for any businesses operating in the regional projects market.

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GCC Projects Market Report 2015 report is available now and can be purchased from MEED’s new online store.