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Analysis of the Gulf real estate sector is "extremely" difficult due to
a scarcity of consistent information, Moody's Investors Service said on
Tuesday.
In its first report on the
sector, the ratings agency said the broad outlook for the market was
positive, but cautioned that a lack of information and regulation, and
inconsistent market estimates made accurate analysis a problem.
"...accurate analysis of the market is made
extremely difficult by the still sketchy nature of official
information, only gradually evolving regulation and the significant
differences in market estimates, depending on the source," said Philipp
Lotter, senior credit officer at Moody's.
However, the agency
said ratings were likely to remain stable thanks to strong government
support for the sector, the availability of land and sustained growth
in the market.
Many master developers in the Gulf are owned wholly or in part by governments.
“The
two overriding features [that need to be considered when rating
companies] are the large-scale availability of land, which is made
available to many master developers either for free or at very
favourable prices, and the significant growth of the markets, fuelled
both by speculative investors but also more sound fundamental factors,"
Lotter said.
Moody's said one area holding back ratings was
companies' heavy exposure, both regionally to a certain country or even
city, and operationally to a handful of large projects.
"This exposure to a single market acts as the largest constraint on companies' creditworthiness," Lotter said.
Moody's currently rates six companies that directly or indirectly engage in the Gulf property industry.
Four
of these are based in Dubai, one in Qatar and one in Saudi Arabia, with
five of these government-related issuers, meaning their ratings
incorporate government support in the hypothetical event of financial
distress.
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