UAE Developers Rush to Reassure Investors Wary of War Risk

The Burj Khalifa skyscraper, centre, on the city skyline in Dubai, United Arab Emirates. Photo by Walaa Alshaer /Photographer: Walaa Alshaer/Bloo

Article content

(Bloomberg) — A number of developers in the United Arab Emirates have held calls with investors to allay concerns over a potential liquidity crunch, a stark reversal of fortunes as the Iran war approaches the one-month mark.

Article content

Developers including Binghatti Holding Ltd. and Omniyat Holdings Ltd. spoke with investors on Wednesday as their bonds slipped into distressed territory following the conflict, according to people familiar with the matter, who asked not to be identified discussing confidential information.

Article content

Article content

Article content

Others, including Sobha Realty and Arada Developments, have held similar calls since the war began, some of the people said. Debt issued by all four companies is rated below investment grade by major ratings firms, according to data compiled by Bloomberg. 

Article content

Article content

Among listed firms, Emaar Properties PJSC, builder of the Burj Khalifa, the world’s tallest tower, and Aldar Properties PJSC, Abu Dhabi’s largest developer, also reached out to investors, some of the people said.

Article content

Emaar’s shares are down about 25% since the conflict began, under-performing Dubai’s benchmark, which has fallen around 15%. Aldar is down about 27% over the same period, while the Abu Dhabi benchmark has dropped around 8%.

Article content

The moves reflect a rapid shift in sentiment. The real estate market, particularly in Dubai, is coming off a record rally driven by ultra-wealthy buyers who snapped up luxury villas and penthouses, pushing the emirate ahead of New York and Hong Kong in sales of homes priced above $10 million.

Article content

But the UAE has borne the brunt of retaliation from Tehran since the US-Israeli war on Iran began on Feb. 28, with energy infrastructure, airports and residential and commercial buildings hit by projectiles and debris. Even so, much of the country remains operational: businesses are open, many offices have shifted to remote work, and investors continue to pursue global deals.

Article content

Article content

Still, brokers have told Bloomberg News that many buyers are adopting a wait-and-see approach. Early signs suggest some are halting plans to purchase properties ahead of construction, or “off plan.”

Article content

Get the Mideast Money newsletter, a weekly look at the intersection of wealth and power in the region.

Article content

During the recent calls, several developers presented stress-test scenarios aimed at demonstrating liquidity resilience.

Article content

Binghatti, whose call drew more than 300 investors, outlined a worst-case scenario involving a 20% decline in collections and a 30% drop in average selling prices of unsold inventory. Even under those assumptions, the company projected cash of more than 5 billion dirhams ($1.4 billion) by year-end and close to 14 billion dirhams by the end of 2027, the people said. The firm added it has seen no delays in customer payments or defaults.

Article content

Representatives for Binghatti, which focuses on mid-market housing but has also pushed into luxury projects — including plans for a Mercedes-branded tower and one of the world’s tallest residential buildings — declined to comment.