Event though real estate sector in Dubai has been significantly hit, the emirate's prime retail and hospitality assets remain resilient and have some flexibility to weather further volatility, according to Fitch Ratings.

'Retail rentals and hospitality revenues are holding up relatively well and performing better than expected in 2011 compared with Fitch's base assumptions,' remarked Bashar al Natoor, the director in Fitch's Corporates team in Dubai.

'This is partly because the turmoil affecting some Middle East destinations had a positive impact on Dubai's hotel, retail and residential sectors as well as active asset management by leading players,' he noted.

Despite signs of stabilisation in Dubai's real estate market, Fitch cautions that the real estate and hospitality sectors could potentially experience increased vacancy rates and a higher risk of buyer and tenant defaults, due to depressed fundamentals, such as oversupply and low investor confidence and liquidity (albeit improving) and the effects of another global crisis.

 The latter would be closely linked to macroeconomic conditions in Dubai and the region.

Fitch affirmed Majid Al Futtaim Holding's (MAF) long-term issuer default rating (IDR) and senior unsecured rating at 'BBB', with a stable outlook in March.

MAF maintained strong financial metrics in FY10 and FY11, despite the challenging property environment in the UAE and exposure to Bahrain and Egypt.

The ratings agency pointed out that operational performance was resilient, with the occupancy rate remaining at 98.6 per cent as MAFP benefits from an average lease length of 7.7 years, which compares well with European peers, a quality and diversified tenant base exhibiting an estimated 95 per cent lease renewal rate, and a low tenant default rate below one per cent.

Fitch had revised the outlook of Dubai Holding Commercial Operations Group (DHCOG) to stable from negative and affirmed its long-term IDR and senior unsecured rating at 'B' in January.

According to Fitch, the outlook revision reflected the company's good progress with its non-core asset disposal programme, its better-than-expected operating performance in the hospitality and  rental divisions, and reduced leverage.-TradeArabia News Service