![S&P says Dubai home prices to fall further in 2019, main culprit is supply S&P says Dubai home prices to fall further in 2019, main culprit is supply](https://globalrubbermarkets.com/wp-content/uploads/2024/08/sp-says-dubai-home-prices-to-fall-further-in-2019-main-culprit-is-supply.jpg)
By Davide Barbuscia
DUBAI (Reuters) – S&P Global (NYSE:) Ratings said on Tuesday it expects Dubai residential property prices to fall further in 2019 due to a continued gap between supply and demand, before a gradual stabilisation in 2020.
The Dubai government’s finances rely in large part on real estate-related income so they could suffer if the downturn is exacerbated, S&P said in a report.
“We continue to have a very grim view of the market,” Sapna Jagtiani, associate director at the rating agency, told reporters.
“Main culprit is supply,” Jagtiani said, adding that other factors were the volatility of oil prices and rising interest rates.
S&P said the residential property market was unlikely to see a meaningful recovery in 2021. Prices have fallen 25 percent to 33 percent in nominal terms since 2014, the report said citing property consultancy Asteco.
S&P said it expected them to fall another five to 10 percent this year, meaning they would approach the lows reached in 2010, after the financial crisis.
The rating agency also warned of a scenario in which developers do not rein in new developments, with oversupply causing prices to decline as much as 15 percent in 2019, and another five to 10 percent in 2020.
S&P on Monday downgraded DAMAC Real Estate Development Ltd one notch to a BB- rating.
“Weak market conditions will continue to translate into higher leverage in the real estate sector and have already led to some negative rating actions over the past six months,” including for banks and insurance companies, the report said.
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Source: Investing.com