Oversupply to cap property recovery: Moody's
Oversupply in Dubai’s property market is likely to delay a price recovery until 2016, ratings agency Moody's said on Monday.
"When you look at Dubai, yes the market is oversupplied on the residential side," Martin Kohlhase, senior analyst, EMEA Corporate Finance at Moody's, told the Reuters Middle East Investment Summit in Dubai.
"We don't see recovery over the next five years. New construction, new projects are unlikely to happen and the same would hold true for the commercial market," he added.
Dubai's housing market will fall another 10 per cent before it stabilises, a Reuters poll showed earlier on Monday, adding the market is oversupplied by about 25 per cent.
Brokerage AlembicHC said last month it would take at least three years for supply and demand to reach equilibrium, while Rasmala Investment Bank's Saud Masud said it would be 2020 when property prices get back to 2008 levels assuming five or six years of recovery.
House prices in Abu Dhabi are expected to fall another 14 per cent from here, or 60 per cent from their peak, Reuters property poll showed, while rents are expected to slump 14 per cent this year and 10 per cent next year.
In June this year Moody's downgraded Aldar Properties credit ratings to B2 from Ba3 with outlook changed to negative.
"There is a higher chance of revisiting the credit rating over a 12- to 18-month period with negative pressure," Moody's Kohlhase said at the summit.
DUBAI SAFE HAVEN
Dubai has been seen as a safe haven during Mena turmoil that has gripped the Arab world and toppled leaders in Tunisia, Egypt and Libya.
The Gulf emirate's retail sector has benefited from the unrest, Iyad Malas, chief executive of mall developer Majed Al Futtaim (MAF) Holding, told the Reuters on Monday.
"Arab spring benefit to Dubai has been evident in the summer because people in the GCC didn't travel elsewhere in the region," he said.
"Mall traffic continues to be very strong. We've seen drops of about 20 per cent in sales from top to bottom but since then (the turmoil) we've seen an upturn."