S&P: 2027 and 2028 Deliveries Could Deepen Dubai Real Estate Price Correction

Credit rating agency S&P Global stated that residential property prices in Dubai have declined moderately over the past seven months since the start of the war in the region, while transaction volumes dropped sharply, in a response to a credit FAQ addressing the impact of the war on the emirate's real estate market.

Sapna Jagtiani, a credit analyst at the agency, said the baseline scenario assumes ongoing unrest in the Middle East through 2027, and that new deliveries scheduled for 2027 and 2028 could accelerate the pace of price correction, particularly in investor-driven apartment segments.

The agency noted that an easing of geopolitical risks in 2027 could allow prices to stabilize thanks to the resilience of market fundamentals and the regulatory framework, even as new supply enters the market.

The response also addressed the implications of a potential correction on the credit ratings, liquidity, and funding of Dubai developers, as well as banks' exposure to any deeper correction, in addition to risks of payment delays, construction disruptions, capital expenditure outlooks, and dividend distributions.

What Do These Terms Mean?

Credit Rating: An assessment issued by a specialized agency regarding the ability of an entity or company to meet its financial obligations, affecting borrowing costs and financing terms.

Price Correction: An orderly decline in asset prices following a period of growth, aimed at bringing prices back to levels closer to their actual value.

Credit FAQ: A report issued by a rating agency answering frequently asked questions from investors about a specific sector or event.