According to the credit rating giant Fitch, UAE real estate developers will likely prioritise conserving capital amid the ongoing Middle East conflict, indicating the industry’s preference for scaled-back operational expansions, project launches and land acquisitions.
The ratings agency further noted a dropping buyer interest, while predicting that the industry’s urge to conduct overseas forays (plans of expanding into other neighbouring markets like Saudi Arabia, Oman or Kuwait) will likely be subdued. However, the sector won’t be facing any imminent financial risk, with developers possessing significant contractual backlogs that can guarantee future income flow.
“UAE homebuilders are likely to prioritise cash conservation following the geopolitical shock in the Middle East. Immediate viewings have fallen, although the contractual backlog of pre-sales and purchasers’ escrowed cash should provide stability in the near term,” the agency remarked.
Fitch doesn’t see developers backing out from delivering on projects that are already pre-sold, as funds for these are already sitting in protected escrow accounts. In fact, companies known for their agile operational nature will likely stick to the already committed completion dates, even if supply chain disruptions emerge.
However, developers may scrutinise their plans for launching future projects because average selling prices may drop, and most importantly, the debt needed to start the work will become riskier.
According to Fitch, instead of capturing profit, the UAE’s real estate industry will likely go for ensuring liquidity for stakeholders. So, the industry players will likely pull back on buying new land, which usually costs 20% of a project’s end-value, or other major investment commitments.
“Future rating actions will be focused on understanding homebuilders’ actions to conserve liquidity under the current situation, and the extent of visibility they have before committing to the next stage of the group’s future and debt-funded investment outlay,” the credit rating agency mentioned in its outlook.
The agency, however, sees the UAE authorities proactively supporting the industry, while promoting various Emirati cities’ strategies of increased infrastructure and investment.
Talking further about this, the venture remarked, “Fitch believes this could entail potential changes, such as deferred payments for land, flexibility with escrow mechanisms, or financing to entice purchasers, to aid the sector. In past downturns, UAE homebuilders provided forms of financing for prospective purchasers and loosened the customer’s payment plans, but these measures increased the builder’s own debt burden.”
Fitch’s prediction comes amid the backdrop of the Dubai Financial Market (DFM) Real Estate Index witnessing a 30% plunge since the beginning of the Middle East conflict, with the industry erasing the gains it made in 2025.
Last year, transactions in the sector reached nearly AED 917 billion (roughly USD 250 billion), which also became the highest in Dubai’s history. More than 270,000 deals were closed during the year, reflecting broad investor participation.
Residential deals alone accounted for around 200,000 transactions worth AED 538 billion. The DFM Real Estate Index, on its part, gained 63% in 2024 and 38% in 2023. On 27th February, it reached a peak of 16,910 points, after which the Middle East conflict started to escalate.