The tricky state of Dubai’s real estate market will not get better with Expo 2020, S&P Global Ratings said, where residential property prices have fallen by over 25% since 2014.
Dubai could attract 11 million foreign visitors to Expo 2020 world fair, according to the event’s organisers.
This is expected to grow tourism and the retail sector, but not the property market.
“We believe Expo 2020, just on the back of potential visitor flows to the emirate, will ease temporary pressures on hotels and retailers. However, it is unlikely to materially improve long-term conditions in the real estate sector,” S&P Global Ratings credit analyst Sapna Jagtiani said in a statement.
Slowdown intensifies
In its latest Middle East Chart book by Capital Economics, consultant William Jackson argues in similar vein, suggesting early signs are that the UAE’s economic slowdown has intensified in the second half of this year.
“In year-on-year terms, which is what matters for GDP growth, oil output declined for the first time since mid-2018 in October. This contraction in output looks set to deepen in the coming months before fading out at the start of next year.
“The non-oil sector has continued to struggle. Imports – a proxy for domestic demand – are contracting at their fastest pace since the end of 2017. Private sector credit growth has remained weak. And the slump in Dubai’s real estate sector shows no signs of abating.
“Next year’s World Expo should provide some boost to activity. But we are concerned that once the Expo leaves town, some government-related entities may struggle to service their large debts.”
