Abu Dhabi Builders Face Less Problems Than Dubai’s, Moody’s Says - Bloomberg:
Abu Dhabi real estate companies will face less severe headwinds from the double whammy of the coronavirus pandemic and lower oil prices than those in neighboring Dubai, Moody’s Investors Service said.
Residential oversupply isn’t as pronounced in Abu Dhabi, which supports the credit quality of Aldar Investment Properties and Emirates Strategic Investment Co., Moody’s analyst Lahlou Meksaoui wrote in a note on Monday. In Dubai, job losses, salary cuts and travel restrictions are slashing demand for new property.
“The economic contraction and its fiscal implications will be most acute in Dubai, where the economy is very reliant on tourism and transportation,” Meksaoui wrote. Still, there will be a credit-quality erosion of real estate companies in the United Arab Emirates, he said.
As the coronavirus wreaked havoc on the global economy, it also aggravated Dubai’s property slump where oversupply has pushed prices lower for the past six years. Now, with companies like Emirates airline laying off staff and some estimating Dubai’s population could shrink by 10%, the downturn is likely to further reduce rents and the value of homes.
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