Dubai – Mubasher: S&P Global Ratings has downgraded its rating for Emaar Properties and Emaar Malls to 'BB+' from 'BBB-' each, with a negative outlook due to the economic repercussion of the coronavirus (COVID-19) on Dubai's real estate sector.

The rating agency referred that Dubai is facing an economic recession, which will heavily affect Emaar Properties' business segments, according to a recent report by S&P.

Amid COVID-19, Dubai's open economy is expected to contract by around 11% in 2020, as it depends on retail, logistics, tourism, and real estate.

S&P estimates that Emaar Properties' earnings before interest, tax, depreciation, and amortization (EBITDA) will decline between 30% to 40% in 2020 due to a 15% to 20% drop in revenues.

Meanwhile, the downgrade of Emaar Malls reflects the weak performance of the retail sector, which heavily relies on tourism.

"The supply-demand imbalance in the realty sector appears to have been exacerbated by the pandemic. We now expect to see international demand for Dubai's property to be subdued, and the fall in residential prices to be steeper than we had expected lingering well into 2021," the report referred.

In addition, the rating agency has downgraded the rating of DIFC Investments from to 'BB+' from 'BBB-', with a stable outlook.