DUBAI (WAM)
S&P Global's analysts stated during a roundtable on the credit rating trends for the Gulf Cooperation Council (GCC) countries in 2024 that UAE banks will continue to achieve strong results during the current year, supported by prevailing interest rate levels so far.
Regarding the agency's commentary on the announced expansion of Al Maktoum International Airport and its impact on the real estate sector in nearby areas, it was anticipated that it would directly impact projects and housing demand in the areas close to the new airport terminal.
During the roundtable meeting, analysts from "S&P Global" credit ratings discussed the trends and key issues about the GCC countries' market sectors, banks, energy, companies, and infrastructure entities.
Dr Mohamed Damak, a financial institution rating analyst at S&P Global Ratings, said, "We expect three interest rate cuts this year, totalling 75 basis points in the second half of the year, followed by further cuts of 125 basis points in 2025."
He pointed out that Emirati banks will continue to achieve strong results this year, supported by the fact that interest rates remain high despite the expected reduction trend.
Damak also said, "When discussing asset quality, the picture remains strong, with a low level of non-performing loans and a coverage ratio of 100 per cent, which is more than adequate."
Tatiana Liskova, an analyst in corporate ratings at Standard & Poor's Global Ratings, spoke about the real estate sector, its recent developments, and its trajectory in the coming years.
Regarding the real estate sector in Dubai, she pointed out that transactions for purchases, demand, and prices have all increased in the recent period. Consequently, real estate developers have significantly improved their financial robustness over the past few years, enhancing their cash balances and collections.
She also discussed the impact of the recent announcement regarding the expansion of Al Maktoum International Airport to become the world's largest airport with a capacity of up to 260 million passengers annually. She noted that the project will have an impact on the city and the economy as a whole, with direct effects on the real estate sector in the near future, especially in nearby areas.
She highlighted the presence of numerous ongoing projects in the areas adjacent to the airport, as well as many developing areas, in addition to other projects that will commence later and accelerate after the expansion announcement.
She continued, "The workforce at the airport itself and in the surrounding projects will create significant demand for housing in the areas nearby the airport."
On his part, Emir Mujkic, Director and Senior Analyst of Insurance Ratings at the agency, spoke about the insurance sector in the region, expecting the industry to continue achieving good profitability and for insurance premiums to grow, supported by new projects in the region in general.
He also predicted an increase in car and property insurance prices, which will be reflected in higher insurance premiums overall.