Introduction

The ongoing conflict in West Asia is beginning to affect the construction landscape in the UAE, particularly in Dubai. Several developers are facing delays in property handovers due to a multitude of factors, including supply chain challenges, escalating costs, and stricter bank financing. These issues are poised to impact the delivery of new residential units slated for 2026, with many experts predicting significant delays.

Growing Delays in Handovers

According to recent data from Anarock Middle East, approximately half of the 45,000 residential units scheduled for completion in Dubai by 2026 will likely be postponed until 2027 or beyond. This shift in timelines is attributed to severe construction cost increases—estimated to have surged by nearly 30%—as well as bottlenecks in material supplies. In fact, Dubai’s under-construction property market represents nearly 70% of total transactions, fueled by robust demand from foreign investors, rising migration, and aggressive project launches. Currently, there are around 1,592 active construction projects in Dubai, consisting of more than 482,000 units valued at over AED 366 billion.

Anuj Kejriwal, CEO of EMEA at Anarock Group, emphasizes the magnitude of the handover backlog for 2026, stating, “A delay of six to twelve months seems realistic, given the existing market conditions.” Furthermore, Wynn Resorts has recently announced that its ambitious $5 billion integrated resort project in Ras Al Khaimah will also experience a modest delay, highlighting the challenges facing even large-scale developments.

Supply Chain Challenges

The UAE’s heavy reliance on imports for construction materials has exacerbated the supply chain crisis, causing input costs to rise between 18% and 28% across multiple categories. High-demand segments like premium ceramics, aluminum facade sheets, and mechanical, electrical, and plumbing (MEP) components have been particularly affected. Kejriwal noted that recent geopolitical tensions, such as US-Israeli strikes on Iran, have severely disrupted Dubai’s construction supply chain, leading to rerouted vessels and halted shipping services.

Moreover, two prominent aluminium producers in the Gulf have reported significant production setbacks due to these strikes. Emirates Global Aluminium’s Al Taweelah facility is estimated to take up to a year to fully restore its primary aluminium production, while Aluminium Bahrain has curtailed nearly 20% of its smelting capacity. Given that around 58% of construction projects are still in the early stages (0-20% completed), they remain especially vulnerable to additional logistical challenges, contractor shortages, and escalating costs. Aditya Earnest John, a property market expert in Dubai, indicates that developers are now factoring in buffer timelines, with six-month delays becoming increasingly likely.

Impact on Financing

The tightening of bank financing has further complicated the situation for developers. Many are struggling to secure liquidity through escrow accounts as banks become more conservative in their underwriting practices. Previously, banks freely extended credit based on escrow deposits, but shifting market uncertainties have led them to scrutinize developer credibility more closely. Sahitya K. Chaturvedi, Secretary General of the Indian Business & Professional Council (IBPC), points out that this new cautious approach is placing additional stress on real estate developers, not just contractors.

Conclusion

The precarious state of Dubai’s construction market raises concerns about the future of the region’s real estate sector. With delivery delays, escalating costs, supply chain disruptions, and stricter financing conditions, developers find themselves navigating an increasingly complex landscape. Future prospects will largely depend on how these challenges are managed, and how quickly the local market can adapt to evolving global dynamics.