Fitch Ratings has echoed that Dubai banks have adequate buffers against a correction in the emirate’s booming property market. This assessment comes at a critical time for Dubai’s real estate industry. While prices continue to gain steam, issues of market liquidity are becoming a hot topic. Anton Lopatin, a Senior Director at Fitch Ratings, highlighted the resilience of financial institutions in the region while addressing these developments.
In this context cash flows for developers have been currently improving given a recent property boom, supported by increasing prices. As a result, this economic boom has put banks in a strong position to withstand potential economic storms. Unfortunately, the market is not without its potholes. Owners are finding it harder to sell their buildings, pointing to a changing demand dynamics.
Lopatin also highlighted the need to de-emphasize assets in Dubai’s crowded prime real estate space. These properties will remain on many investors’ wish lists simply based on their built-in intrinsic value and location, location, location. We urge investors to look at these opportunities for high quality, well developed projects that continue to perform well through many economic cycles.
Even with a positive outlook on the market for many contributing segments, we are starting to see signs of cooling market liquidity. This trend sends a strong signal that home sales are either slowing or potential buyers are disappearing from the market altogether. Consequently, buyers are growing more cautious, as are sellers of brokerage and technology. So some property owners in Dubai are finding a lucrative new market for them. Now, some of these investors are doubling down on short-term rentals to maximize their yields. This dynamic, ongoing change reflects the innovative, resilient steps owners are taking as the market evolves and adapts around them.