Dubai – Mubasher: S&P Global Ratings has affirmed Damac Real Estate Development’s long-term issuer credit rating at 'BB' with a stable outlook.  

The US-based financial services firm also affirmed 'BB' issue rating on three – $500 million, $125 million, and $452.3 million – sukuk trust certificates issued by Damac through Alpha Star Holding III, Alpha Star Holding IV, and Alpha Star Holding, S&P said in a statement released on Sunday.

While we deduce that Damac will perform poorly in 2018 and 2019, our report took the weakened state of the whole real estate sector in the UAE into account, the US rating services provider explained.   

Residential units’ prices and rents in Dubai have decreased by 5%-10% in the previous year and will see more decline in 2018.

“The stable outlook on Damac reflects our opinion that the company will withstand the current softening in the Dubai residential real estate market over the next 12-24 months,” S&P revealed.

If Damac did not improve its performance, due to the deterioration in the domestic market, the company’s rating could be lowered, it added. 

The current rating may not undergo any modification in the coming two years, while a higher rating could be realised if Damac strengthed its risk profile, S&P’s data showed.

“This could occur if Damac establishes a sound track record in selling and delivering large complex projects like Damac Hills and Akoya Oxygen and demonstrates an ability to withstand a sharp slowdown in sales growth while containing operating costs,” the international rating corporation remarked.