“I mentioned”S&P GlobalIn an article entitled “What are the features of Dubai’s economic prospects?” issued today, Wednesday, the impact of the escalating regional geopolitical tensions on the overall economy of the Emirate of Dubai “has remained slight so far,” especially the hospitality and real estate sectors, which contribute about 30 percent of the gross domestic product. The nominal total of the emirate.
But on the other hand, the International Classification Corporation said that “Dubai’s open economy remains structurally vulnerable to cyclical fluctuations in global and regional demand.”
S&P Global still assumes that there will be no direct and long-term conflict between… Israel America on the one hand and Iran on the other hand. However, she said, “The escalating geopolitical tensions in the Middle East region represent risks to our expectations for growth in Dubai and the United Arab Emirates,” noting that Dubai’s economy may be affected through several key channels including energy prices, tourism, capital flows, supply chain disruptions, and inflationary pressures, which are likely to worsen if the conflict reaches a turning point.
S&P Global estimates Dubai’s per capita GDP at about $38,000 in 2024. The resident population (excluding residents in other parts of the UAE who commute to Dubai for work) reached 3.7 million people at the end of The year 2023, according to the Dubai Statistics Centre. S&P Global expects the number to reach 4.0 million people by 2026 with a strong influx of arrivals to the emirate.
The services sector is driving growth
S&P Global said that the services sector will lead growth in the Emirate of Dubai, including real estate, hospitality and financial services, supported by social and economic reforms across the United Arab Emirates.
“Pro-business regulations, a simplified visa regime, and the success of long-term residency visas will continue to support the establishment of new companies in Dubai,” S&P Global said.
S&P Global stated that the tourism sector in Dubai continues to achieve strong results, as it received 9.3 million international visitors in the first half of 2024, an increase of 9 percent year-on-year, and the average hotel occupancy rate remains high, at about 80 percent. percent, according to data published by the Department of Economy and Tourism in Dubai.
In the real estate sector, the market is witnessing a recovery, especially in destinations such as Palm Jebel Ali, The World Islands and Dubai Islands, as these destinations could provide impetus to the hospitality and luxury lifestyle sector in Dubai.
The wholesale and retail trade sector, which contributes about 20 percent of Dubai’s nominal GDP, continues to grow.
“Although business costs are somewhat higher, we expect the impact of geopolitical tensions on trade in Dubai, including disruptions to Red Sea trade routes, to be only minor, as trade between Dubai and Asia accounts for nearly half of its trade.” “We expect it to remain relatively unaffected by the current tensions,” according to S&P Global.
According to the latest statistics available from Dubai Customs, the volume of Dubai’s non-oil foreign trade will reach 2 trillion UAE dirhams in 2023.
Real estate prices
S&P Global said that the residential real estate sector in Dubai remains strong, as the number of real estate transactions increased by 45 percent in the second quarter of 2024, according to the Dubai Land Department, along with a 37 percent increase in value.
“The influx of wealthy individuals to Dubai since the introduction of the Golden Visa in the UAE is a major support factor for the growth of residential real estate in Dubai. At the same time, the demand for real estate from residents and international investors in the middle and affordable price categories remains a strong factor,” according to Maa. Reported by S&P Global.
However, S&P Global expects prices to stabilize from 2025-2026, when a large number of pre-sold units are delivered, “and this may create some risks from excess supply, as the market’s absorption of new units depends on population growth in the emirate.” and demand trends.
On the commercial side, the International Classification Corporation expects that the economic opportunities, the reputation of the United Arab Emirates as a safe haven and its low tax system will support Dubai’s attractiveness to global investors, noting that this is evident by the fact that office vacancy rates have reached their lowest level in the emirate in years, as no So far, it has been affected by the spread of remote work and rising rents.
Financial performance of the Dubai government
S&P Global said that over the past two or three years, the Dubai government has succeeded in strengthening its balance sheet by significantly reducing its debt.
It expected Dubai’s total general government debt to decline to 34 percent ($50 billion) of GDP by the end of 2024, from 70 percent of GDP in 2021.
“The government has repaid about AED 40 billion ($11 billion) of debt in 2022 and 2023… As a result, we expect Dubai’s total government debt to decline to 38 percent of GDP by the end of 2023, from about 70 percent of GDP.” Total for 2021,” according to S&P Global.
The corporation expected that the Dubai government would record financial surpluses at a rate of 1.6 percent of gross domestic product during the period 2024-2027, supported by the profits of government-related entities, the corporate income tax, and the strong collection of non-tax revenues.
He added: “In our base scenario, we expect the strong performance of the real estate and tourism sectors to boost fee collections from sectors such as tourism, aviation, land transfer fees and mortgage registration, while the government’s ongoing operations to float stakes in associated entities will support their revenues.”
