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Investor demand for GCC real estate bond and sukuk issuances is not likely to rebound this year, with executives at financial services firm Arqaam Capital declaring the debt market effectively “closed” for developers for the remainder of 2026.
“I don’t think anyone is going to be very excited about investing in real estate companies in the immediate future,” said Omar Musharraf, Managing Director for Debt Solutions and DCM at Arqaam Capital. He told Zawya that there may be “drips and drabs” next year in terms of debt issuances, “but for 2026 I am pretty certain they are out of the game until this whole new wave of completed blocks of apartments and villas comes through.”
Musharraf’s comments come amid growing liquidity concerns facing real estate developers in the region, who have been impacted by spiralling pre-development costs and supply chain disruptions following the outbreak of the United States and Israel’s war with Iran and the subsequent blockade of the Strait of Hormuz.
While escrow regulations in Abu Dhabi and Dubai would continue to provide near term liquidity support, extended geopolitical uncertainty could weigh on investor confidence, potentially leading to project delays, cancellations, and increased strain from land bank commitments, Fitch reported.
“At the height of the conflict, for issuers that were planning to tap the market, it was no longer a pricing discussion but more about market access,” Musharraf said. “Now, months into the conflict, we can say the DCM business will continue to hold in the region, but out of the 100 that were planning, maybe 20% may fall away. The current market is definitely harder for debut issuers and certain sectors, such as real estate.”
Dollar bonds issued by regional property developers came under pressure in March as concerns over credit quality and refinancing risks shook investor confidence. Dubai’s real estate equity index fell about 15% in a week, while sector names led the selloff amid credit spread widening of roughly 180–250 basis points.
“When the year began, it was all very focused on real estate with yields that we had not seen in the region. So, when the eventual rebound came, it came very violently, and very quickly,” said Jad Raouda, Partner, Fixed Income Sales at Trading, Arqaam Capital.
“What we are seeing now is the marginal buyer that is going to take a look at these real estate names, they are going to do their homework, and they are going to be very selective,” he added.
In May, Arqaam Capital worked on Saudi Arabia’s Dar Al Arkan Real Estate Development sukuk issuance, raising $600 million from a US dollar–denominated, fixed-rate senior unsecured offering, priced at 7.25% with a 7.375% yield.
The Tadawul-listed firm, which historically focused on wholesale land sales before expansing into retail and vertical projects, said the sukuk proceeds will fund growth and existing developments.
“Yes, that was the only real estate issuance that we deemed was fit enough to actually access the markets because it was more of a land bank kind of play than a retail one,” Musharraf explained. “Retail developers are now out of the game for a while. I think the market is closed for them, and I think they realise it as well.”
(Reporting by Bindu Rai, editing by Seban Scaria)
