Carry on building: UAE developers dig in despite war

• Projects broadly on schedule
• New contracts awarded
• Hormuz could mean bottlenecks

Developers across the UAE say construction is holding steady despite the US-Israel war on Iran rattling the real estate market, with major projects continuing broadly on schedule.

But while building activity remains resilient, analysts and industry data point to early signs of strain elsewhere, with mortgage lending tightening and risks rising in the rental market as economic pressure begins to filter through.

Jamal Bin Thaniah, the chairman of Emaar Properties, Dubai’s largest developer, said he is “not worried” about the conflict’s impact on business at the company’s annual general meeting on Thursday.

The group’s share price has dropped more than 20 percent since the start of the war but Bin Thaniah said he believes “a strong rebound” would follow.

Binghatti Holding, a Dubai developer that focuses on off-plan sales, said its construction operations remain fully operational and on schedule despite “heightened geopolitical tensions”. Cancellation rates remain low, consistent with historical levels of below 1 percent, it said.

Deyaar, another developer in Dubai, put out a statement on Tuesday that “construction and development activities across its portfolio are progressing in line with planned timelines”, adding that it still hopes to complete around 2,000 homes in the emirate this year. 

On Monday UAE developer Arada awarded the main construction contract for a new K-12 school in the AED9.5 billion ($2.6 billion) Masaar, a forested mega-project in Sharjah.

On the same day smaller developer Beyond said that construction on its project in Dubai Maritime City, which opens next year, is continuing. 

In Ras Al Khaimah, Wynn Resorts reaffirmed that construction on its casino is ongoing, though it did briefly halt during missile and drone interceptions over the emirate.

“The Wynn is definitely on track, I think maybe it has had a month or two delay,” RAK Properties CEO Sameh Muhtadi told AGBI last week. He said it was looking at an April 2027 opening and that he was confident it would be completed on time.

The company said it would continue awarding contracts for projects, though it has paused off-plan marketing efforts and new launches until May. 

• Reality check for construction as costs and constraints rise
• RAK Properties outlines plan as Iran war tests market
• Mishal Kanoo: War won’t break Dubai’s economic model

In a March 16 report, S&P Global Ratings said it expects construction to continue in the UAE in the short term but that it may be impacted if the war continues for a longer period of time. 

“We understand that construction activity continues normally, and the city has a track record of ensuring minimal construction delays during other stressors, specifically the Covid lockdowns,” it wrote. 

“However, if the Strait of Hormuz remains closed for a prolonged period, availability of some construction material may hit bottlenecks. Input costs could increase due to reroutes and higher shipping and fuel prices,” it added.

Meanwhile, mortgage lending is tightening as UAE banks grow more cautious.

Tenants in Dubai are also at risk of defaulting on rent as job cuts triggered by the economic shock of the conflict hit the emirate, according to a risk memo from a real estate platform tracking the lease market.