UAE Property Market Cools, But Developers Are Stronger Than Last Cycle: Moody's

(MENAFN- Khaleej Times) The UAE's real estate market is entering a period of softer conditions as geopolitical risks rise and post‐boom momentum fades, but developers are in a stronger position than during previous periods, Moody's Ratings said in a new sector in‐depth report.

Moody's expects a cyclical cooling in the residential market as population growth normalises and a rising volume of off‐plan supply reaches completion over the next few years. The impact of heightened regional security risks has also had an effect.

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Data from the Dubai Land Department shows transaction volumes for completed units fell by around 51 per cent in March and April compared with average levels seen in January and February. Off‐plan sales have also moderated, although no sharp demand freeze has emerged so far. Developers have responded by offering more flexible payment terms rather than cutting headline prices, a shift that Moody's says helps sustain sales momentum without undermining asset values.

Despite the easing in demand, Moody's said the UAE developers it rates - Emaar, Damac, Binghatti and Arada - are“better positioned than in prior cycles”, supported by strong revenue visibility, sizeable presale backlogs and conservative balance sheets. Many rated developers have several years of revenue secured at their current operating scale, limiting near‐term exposure to market volatility.

Execution risks are also mitigated by front‐loaded payment structures, with developers typically collecting a large portion of sales proceeds early in the construction phase. According to Moody's, this reduces reliance on external funding and provides cash flow support even if sales slow further. Balance sheets across the rated universe generally reflect low‐to‐moderate leverage, high equity funding and limited dependence on near‐term capital market access.

“For most UAE developers we rate, strong revenue visibility remains intact despite the shock of the last two months. Balance sheets generally reflect low to moderate leverage, high equity funding, and limited reliance on near-term capital market access,” the agency said.

The agency added that contractual protections, escrow account regulations and significant upfront customer payments reduce the risk of buyer defaults and provide developers with flexibility to resell units or adjust project timelines if needed.“We expect solid liquidity buffers and positive operating cash flow generation to support ongoing construction activity and debt servicing in the next 12 months, providing some cushion against near-term volatility in sales volumes or pricing,” Moody's said.

However, Moody's warned that risks remain skewed to the downside. Prolonged trade disruption through the Strait of Hormuz could raise construction costs and delay project delivery, while a sustained slowdown in cash collections or weaker population inflows would put pressure on liquidity and credit metrics.

Overall, while near‐term market conditions are expected to soften, Moody's said structural improvements in funding models, payment plans and regulatory protections mean UAE developers are better equipped to absorb shocks than in earlier real‐estate cycles.

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