Dubai real estate developers are radically shifting business models and turning to locally-sourced materials as tariffs drive up construction costs and disrupt global supply chains, industry executives told Arabian Business.
Rising material prices are fundamentally altering how developments are planned, financed and built in the emirate, forcing strategic changes that could reshape the industry amid varied market effects.
“The current tariffs are affecting Dubai developers differently compared to past trade disruptions, mainly because they target global supply chains and material costs rather than just financial markets or oil prices,” Ben Bandari, CEO and founder of real estate firms BenCo and DevCore, said in an interview with Arabian Business.
“Unlike past crises that stalled projects due to lack of funding, today’s challenge is managing higher costs and logistical complexity,” he added.
Material costs trigger project redesigns
Steel, aluminium and glass are among the materials most affected by global tariff policies, with some developers already redesigning projects to reduce their exposure.
“Dubai developers are especially concerned about rising prices for key construction materials like steel, aluminium, glass, MEP (mechanical, electrical, and plumbing) components, and high-end tiles,” Bandari said.
These price increases are directly impacting project plans, with many developers making significant adjustments to maintain viability.
“With price volatility in key imports like steel, aluminium, and MEP components, developers are adjusting strategies in several ways,” Bandari explained. “Some are delaying project starts to wait for more stable pricing or to renegotiate supply contracts. Others are redesigning projects to use more locally available or cost-effective materials.”
This assessment is echoed by other industry leaders who highlight the growing inflationary pressures.
“Ongoing disruptions in global trade are contributing to inflationary pressures, particularly on construction materials sourced from major suppliers like China. Rising costs of raw materials inevitably increase overall construction expenses,” Farooq Syed, CEO of Dubai-based Springfield Properties, recently told Arabian Business.
Financial models face overhaul
The uncertainty has prompted significant changes to how projects are financed, with developers moving away from reliance on buyer payments during construction phases.
“Many Dubai developers are now focusing on having stronger financial backing instead of relying mainly on client payments during construction,” Bandari said. “With rising costs and market uncertainty, they’re securing more funding upfront through investors, bank loans, or partnerships.”
This shift represents a significant change in Dubai’s developer landscape, where off-plan sales have traditionally funded construction progress.
“Many are adding larger contingency budgets to prepare for unexpected price increases in materials. Some are breaking big projects into smaller phases so they can manage costs more easily over time,” he added.
Real estate experts advise commercial developers to ensure robust financial planning rather than relying solely on client payments, which could become less predictable in an uncertain market.
“For developers, the focus must be on prudent financial management. Relying solely on client payments can be risky. Developers should ensure they have the financial strength to complete projects independently, if needed,” Ayman Youssef, Managing Director at Coldwell Banker, told Arabian Business in a recent interview.
However, the impact of tariff-induced price increases is not uniform across Dubai’s property market, with certain sectors facing greater challenges than others.
“Affordable and mid-income housing is at risk because these projects have tight budgets, so even small cost increases can hurt profits,” Bandari said. “Luxury projects are also affected since they rely on expensive imported materials that are now harder to get or more costly.”
The hotel and commercial sectors face additional pressures beyond just construction costs, he noted, with global economic uncertainty affecting investor appetites.
Supply chains shift towards regional sourcing
As global supply chains face disruption, Dubai’s developers are increasingly looking closer to home for materials.
“Dubai developers are increasingly turning to locally sourced materials and suppliers from countries with lower tariff risks to control costs and avoid delays,” Bandari said. “Materials like cement, steel, and basic finishes are now more often sourced within the UAE or from countries like Turkey and India.”
This pivot could strengthen regional manufacturing and potentially reshape supply networks if sustained long-term.
While Dubai’s strategic position may yield advantages for some segments, the UAE’s significant aluminium export sector faces challenges under the new tariff regime.
“The UAE’s aluminium exports to the US — valued at over $1.4 billion annually—will be subject to a widespread 25 per cent tariff under the new policy,” PP Varghese, Head of Professional Services at Cushman & Wakefield Core, noted. “While this will create pressure, the country’s comparatively low-cost production base globally will likely cushion the impact and enable the UAE to remain a competitive supplier to the US market.”
More concerning for Dubai’s property market could be any disruption to the emirate’s re-export model. “If US enforcement begins targeting transhipment or minimal processing, friction could emerge. That would have knock-on effects for space absorption, rental growth, and leasing confidence across core logistics corridors,” Varghese warned.
Currency fluctuations a silver lining
Beyond the challenges, experts highlighted emerging opportunities as the tariff situation evolves, particularly related to currency fluctuations and business relocations.
“Dubai developers are using currency changes to attract overseas investors. Since the UAE dirham is linked to the US dollar, it stays stable, while other currencies like the British pound, euro, or Indian rupee go up and down,” Bandari said.
This currency advantage is being leveraged through tailored marketing strategies targeting international buyers from markets with favourable exchange rates.
“Any drop in currency value tends to drive [property] demand in the UAE from overseas investors,” Chris Whitehead, Managing Partner at Dubai Sotheby’s International Realty, told Arabian Business.
Markets like the UK, Europe, India, and some parts of East Asia could view this “as an opportune moment to lock in high-value properties at relatively favourable currency rates,” CMD of BCD Group, Angad Bedi, said.
Dubai trade hub status strengthened
The tariff situation is also reinforcing Dubai’s position as a strategic trade hub, potentially benefiting developers in unexpected ways.
“As global trade shifts, more companies are using Dubai as a base for shipping, storage, and manufacturing. This is creating demand for warehouses, factories, and commercial spaces — giving developers a chance to build more than just homes,” Bandari said.
Industry experts had previously told Arabian Business that Dubai’s free zones could benefit from companies seeking to restructure supply chains and bypass import duties, potentially triggering new business relocations to the emirate.
“Some international companies are starting to move parts of their operations to Dubai to avoid tariffs and benefit from the city’s strong trade links and business-friendly environment,” Bandari noted.
The Springfield Properties chief executive pointed out that despite these challenges, “Dubai has consistently demonstrated resilience in the face of global economic disruptions.”
Syed also highlighted that Dubai’s real estate market benefits from the region’s advantageous tax structure. The GCC’s general tariff rate of approximately 10 per cent is considerably lower than those of many established markets worldwide, he said.
