Investors who rushed to lend money to
in the
are nursing losses as the
hammers their bonds and threatens to stall a borrowing binge.
Property companies had been leaning increasingly on the bond market as they raced to secure locations for residential projects in
and
. With both cities under sustained attack from Iran, that debt is being sold off. UAE corporate bonds are the
worst performers in emerging markets
this month, with real estate names suffering the heaviest losses, according to a Bloomberg index.
Malcolm Kane, a portfolio manager at RBC Bluebay, said the market is not pricing a repeat of the real estate crash in 2009, when Dubai was rescued by an Abu Dhabi-led bailout. However, there could be “an abrupt end to this upcycle that we’ve seen in recent months,” he added.
Residential real estate was already looking vulnerable before the war started, with analysts warning that prices and rental yields could fall because of a surge in supply. The pressure is now building as the conflict causes panic among some residents and tarnishes the UAE’s international reputation as a stable financial, logistics and tourism hub.
Real estate bond issuance in the UAE hit nearly US$7 billion in 2025, more than double the 2024 number,
. Another US$2.7 billion worth of debt was issued in January and February alone, suggesting the industry was also heading for a bumper year in 2026. Two weeks on, war is upending the outlook.
Five-year green Islamic bonds, or sukuk, issued by Dubai-based Sobha Realty in September have fared the worst, falling 8.5 per cent this month. Five-year sukuk from Binghatti Holding Ltd, sold in February, and Arada Developments LLC are down 7.8 per cent and six per cent respectively.
“A mild correction was due,” said Manuel Mondia, a portfolio manager at Aquila Asset Management. That reversal would now be more severe because sentiment among foreign buyers “will cool down,” he added.
“People are looking at good quality, tier-one names, feeling like they’re safe and then they’re looking at other names which maybe aren’t as well covered, so you are seeing a reduction in those riskier names,” said Eoghan McDonagh, senior portfolio manager at Allianz Global Investors, adding he had trimmed his positions to mitigate risk.
Mondia at Aquila Asset Management said he believed the market was focused on “the two most-levered names,” referring to Binghatti Holding and Omniyat Holdings Ltd. “These are names that might see more trouble down the road.” Omniyat did not respond to a request for comment.
Ratings warning
Fitch Ratings placed Dubai residential tower developer Binghatti Holding on watch for a
, saying the regional conflict could weaken demand among home buyers and investors. It could increase unsold stock and raise the risk of cancellations, which would require more working capital and cash preservation, the rating agency said.
Binghatti said in emailed comments to Bloomberg on Friday that it was in a strong financial position, supported by conservative leverage and ample liquidity. Despite the uncertain backdrop, its operating performance and financial metrics remained robust and it had not observed “any measurable deterioration” in sales, cancellation rates, pricing, leverage, or liquidity.
“The company continues to operate with significant financing headroom, ensuring resilience even in a more constrained funding environment,” according to the company’s statement. “Our available cash resources provide a comfortable buffer to manage volatility, maintain construction momentum, and meet ongoing obligations.”
Buying the dip?
While there are deep-seated concerns about the future of a sector that depends heavily on foreign buyers, both those who want to live in Dubai and those who speculate on its property market, some investors see opportunities in the selloff.
“High quality developers with a proven record of managing operations and liquidity while de-risking their balance sheet in previous market downturns are worth looking into,” said Xuchen Zhang, an emerging markets analyst with Jupiter Asset Management, pointing to Damac Properties’ short-dated bonds as an example.
Damac’s bonds maturing in April 2027 have held up much better than their longer-dated counterparts, dropping just 2.5 cents on the dollar to 100.3. By contrast, its August 2029 notes have declined nearly 5 cents to 95.2 since the start of the month.
“Long term maturities are more about the sector outlook which is too early to call,” said Zhang. “It’s really hard to tell how long the war will last.”