UAE developers have maintained construction schedules despite a 20 to 25 percent surge in imported material costs, with supply chain disruptions having limited impact, according to Moody's Ratings. The credit rating agency's sector in-depth report highlights that real estate developers have kept projects on track despite significant disruption to shipping routes through the Strait of Hormuz, supported by adequate inventories, diversified supply chains, and prudent liquidity management.
Resilience Exceeds Expectations
The report comes as regional conflict has disrupted shipping routes across the Gulf, raising concerns over project timelines, although the UAE's property sector has remained resilient. "Overall, resilience to date has exceeded the expectations of many market observers," the report stated. Moody's noted that imported building material costs have increased by around 20 to 25 percent since the conflict began, but the higher expenses have largely been absorbed by contractors rather than developers.
Fixed-Price Contracts Protect Developers
"Developers are generally either protected in the near term by fixed-price construction contracts or by having locked-in material prices in advance. This will limit the effect on developers' margins and cash flow over the next 12 months," the report explained. Supply chains have been rerouted through ports in Oman, Saudi Arabia, and the UAE's East Coast, reducing reliance on routes through the Strait of Hormuz. While this has increased transit times and logistical complexity, it has been sufficient to keep construction on track for most major developers.
Contractors Absorb Cost Inflation
"Construction is continuing largely as planned, inventory levels are adequate, contractors are so far absorbing most of the cost inflation, and developers are taking steps to preserve liquidity, according to conversations with our rated companies," the report said. According to Moody's, major developers including Emaar Properties, Aldar Properties, Damac Real Estate Development, and Arada primarily rely on third-party contractors, while Sobha and Binghatti benefit from integrated or affiliated construction operations that provide greater control over procurement and project execution.
Inventory Buffers Ensure Timely Handovers
The agency said developers typically maintain two to six months of inventory for critical imported materials, giving them time to adjust procurement strategies while rerouting shipments. "As projects approach completion, developers increase buffer inventories to ensure that missing components do not delay handover timelines. In practice, buildings are often substantially complete several months before handover," the report noted. As a result, Moody's said many projects scheduled for delivery through the end of 2026 were already nearing completion when the disruptions began or had secured sufficient materials to remain on schedule.
Domestic Sourcing Limits Disruptions
Core construction materials such as concrete, steel, aluminum, and ceramic products continue to be sourced largely within the UAE, limiting supply disruptions. Imported items including elevators, air-conditioning equipment, mechanical, electrical and plumbing components, lighting, wood joinery, natural stone, and furnishings remain more exposed to international supply chains. The report said timely project handovers remain critical because developers typically receive around 20 percent to 40 percent of sales proceeds upon completion in Dubai and Abu Dhabi, compared with approximately 60 percent in Sharjah.
