Fitch Ratings said property developers in the United Arab Emirates are likely to focus on preserving cash as the Middle East conflict continues, potentially slowing expansion plans, new project launches and land purchases.
The ratings agency noted that buyer enquiries have already declined and overseas demand could weaken further. However, it said the sector does not face immediate financial stress even if sales slow, as developers hold large contractual backlogs that should ensure steady income in the near term.
Fitch said UAE homebuilders are expected to prioritise liquidity after the geopolitical shock, adding that although property viewings have dropped, existing pre-sales and buyers’ funds held in escrow accounts should help maintain stability.
Projects that have already been significantly pre-sold are still likely to be completed since the funds for them are secured in protected escrow accounts. Delays are also not expected for many ongoing developments, with more agile construction firms likely to keep projects on schedule despite potential supply chain disruptions.
For upcoming developments, however, developers are expected to reassess their plans as selling prices may soften and borrowing to finance new projects has become riskier.
Fitch added that maintaining liquidity has become more important for developers than maximising profits. As a result, companies may scale back land acquisitions—typically costing around 20% of a project’s final value—and limit major investment commitments.
Developers may also slow their international expansion plans, including potential projects in neighbouring markets such as Saudi Arabia, Oman and Kuwait.
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