Moody’s Ratings says UAE developers are keeping projects on schedule.
The agency’s sector‑wide review notes a 20 to 25 percent increase in imported building material costs since the regional conflict began, yet most developers have avoided major delays. Adequate inventories, diversified supply routes and careful cash‑flow management have helped preserve construction timelines.
Contract structures shield developers from cost spikes
Developers often lock in prices through fixed‑price construction contracts, which limits the impact of rising material expenses on their margins. The report explains that contractors are largely absorbing the higher costs, allowing developers to protect cash flow for the next year.
“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,”
— Moody’s Ratings
Major players such as Emaar Properties, Aldar Properties, Damac Real Estate Development and Arada rely on third‑party contractors, while Sobha and Binghatti benefit from in‑house construction units that give them tighter control over procurement.
Supply chains rerouted to keep projects moving
Shipping routes have been shifted away from the Strait of Hormuz toward ports in Oman, Saudi Arabia and the UAE’s east coast. Though this has added transit time, the new pathways have been sufficient to keep most large‑scale projects on track.
Developers typically hold two to six months of critical imported material inventory, providing a buffer while they adjust procurement strategies. As projects near completion, they increase stock levels to ensure that missing components do not delay handovers, often finishing buildings several months before the official turnover date.
Core construction inputs such as concrete, steel, aluminium and ceramic products continue to be sourced mainly within the UAE, reducing exposure to external disruptions. Imported items like elevators, air‑conditioning units and mechanical‑electrical‑plumbing components remain available through the rerouted supply chains.
Moody’s notes that many projects slated for delivery through the end of 2026 were already nearing completion when the shipping disruptions began, or had secured enough materials to stay on schedule.
Frequently asked questions
How are UAE developers protecting themselves from rising material costs?
Developers use fixed‑price construction contracts and maintain two to six months of critical imported material inventory, which limits the impact of price spikes on margins and cash flow.
What role do inventory buffers play in keeping projects on schedule?
Holding two to six months of critical imported material allows developers to adjust procurement strategies and avoid delays, ensuring projects stay on track even when supply routes shift.
Which major UAE developers rely on third‑party contractors versus in‑house construction?
Emaar, Aldar, Damac and Arada work with third‑party contractors, while Sobha and Binghatti use in‑house construction units for tighter procurement control.
How have supply chains been adjusted to cope with the regional conflict?
Shipping routes have been rerouted from the Strait of Hormuz to ports in Oman, Saudi Arabia and the UAE’s east coast, adding transit time but maintaining material availability.
