Due to the war, investors in real estate development companies in the UAE are suffering losses
Real estate companies had been increasingly reliant on the bond market as they raced to secure sites for residential projects in Dubai and Abu Dhabi. But with both cities facing continued attacks from Iran, investors began withdrawing from that debt. UAE corporate bonds were the worst-performing emerging market debt this month, with real estate bonds suffering the biggest losses.
A surprising ending
“The market isn’t pricing in a repeat of the 2009 property crisis when Abu Dhabi and Dubai were bailed out with a support package,” said Malcolm Keane, a portfolio manager at one firm. But he added that there could be a sudden end to the bull market seen in recent months.
The issuance of bonds by real estate companies in the UAE reached about $7 billion in 2025, more than double the 2024 level, which was itself a record. $2.7 billion worth of debt was issued in January and February alone, which indicated that the sector was also heading towards a strong year in 2026. But just two weeks later, the war turned expectations upside down.
The Bloomberg index revealed that investors who rushed to lend to real estate development companies in the UAE are incurring losses, as the Iran war has pressured the bonds of those companies and threatened to halt the borrowing spree that the sector has witnessed.
Real estate companies had increasingly relied on the bond market as they raced to secure sites for residential projects in Dubai and Abu Dhabi. However, with both cities facing ongoing attacks from Iran, investors began to exit those debts. UAE corporate bonds performed the worst among emerging market debts this month, with real estate company bonds suffering the largest losses.
Sudden End
Malcolm Keen, a portfolio manager at one firm, stated: “The market is not pricing in a repeat of the 2009 real estate crisis when Abu Dhabi and Dubai were saved through a support package.” However, he added that a sudden end to the upward cycle we have seen in recent months could occur.
The issuance of bonds by real estate companies in the UAE reached about $7 billion in 2025, more than double the 2024 level, which was also a record. Additionally, $2.7 billion worth of debt was issued in just January and February, indicating that the sector was also heading towards a strong year in 2026. But just two weeks later, the war expectations turned upside down.
