Investors in UAE real estate are grappling with losses as the ongoing Middle East conflict has disruptedmarkets and puts a halt to a recent surge in corporate borrowing. Developers in Dubai and Abu Dhabi had increasingly turned to the bond market to secure land for residential projects, but attacks on both cities have triggered a sell-off. According to a Bloomberg index, corporate bonds in the UAE are the worst-performing in emerging markets this month, with real estate names taking the heaviest hit. Malcolm Kane, portfolio manager at RBC Bluebay, said the market is not bracing for a repeat of Dubai’s 2009 crash, which was mitigated by an Abu Dhabi-led bailout. “However, there could be an abrupt end to this upcycle that we’ve seen in recent months,” he told Bloomberg. Even before the conflict, analysts had warned that residential property was vulnerable, with prices and rental yields at risk due to oversupply. The war has heightened these pressures, prompting some residents to panic and denting the UAE’s image as a stable hub for finance, logistics, and tourism. The pace of bond issuance had been rapid. In 2025, UAE real estate developers issued nearly $7 billion in bonds, more than double the previous year’s total, while January and February 2026 alone saw $2.7 billion issued, suggesting another bumper year. Two weeks into the Iran conflict, that outlook is in doubt. Some of the hardest-hit bonds include Sobha Realty’s five-year green sukuk from September, down 8.5% this month. Binghatti Holding Ltd’s five-year sukuk, issued in February, has fallen 7.8%, while Arada Developments LLC’s is down 6%. “A mild correction was due,” said Manuel Mondia of Aquila Asset Management. “That reversal would now be more severe because sentiment among foreign buyers will cool down.” Eoghan McDonagh, senior portfolio manager at Allianz Global Investors, said investors are gravitating toward “good quality, tier-one names” while shying away from riskier options. “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,” he explained, noting he had trimmed positions to limit risk. Mondia highlighted Binghatti Holding and Omniyat Holdings Ltd as “the two most-levered names” that might encounter further challenges, the agency reported. Fitch Ratings has placed Binghatti on watch for a possible downgrade, warning the conflict could reduce buyer demand, increase unsold inventory, and raise the risk of cancellations, putting pressure on working capital. Binghatti countered in an emailed statement, noting its strong financial position, conservative leverage, and ample liquidity. “Despite the uncertain backdrop, our operating performance and financial metrics remain robust and we have not observed any measurable deterioration in sales, cancellation rates, pricing, leverage, or liquidity,” it said. Amid market jitters, some investors are spotting opportunities. Xuchen Zhang, emerging markets analyst at Jupiter Asset Management, pointed to Damac Properties’ short-dated bonds as a stable option. Bonds maturing in April 2027 have dipped only 2.5 cents to 100.3, while those due in August 2029 have fallen nearly 5 cents to 95.2. “Long-term maturities are more about the sector outlook which is too early to call,” Zhang said. “It’s really hard to tell how long the war will last.”
