Construction costs are rising in Dubai: who really pays, and why buyers are protected

The regional conflict has made building in the UAE more expensive: rerouted shipping lanes, costlier marine insurance, and imported materials that according to Moody's now cost 20-25% more than pre-conflict levels. It is the talk of Dubai's construction sites, and understanding who actually pays these increases is the key to reading it as an investor rather than a spectator.

The verified numbers

Not all materials are moving at the same pace. Cement, steel, aluminium and ceramics rely largely on domestic supply chains and remain stable; the pressure is concentrated on lifts, air conditioning, MEP systems, lighting, wood and natural stone, the items most tied to seaborne imports. As Professor Seyed Ghaffar of the University of Birmingham Dubai puts it, this is not a uniform increase but pressure building gradually.

Who actually pays the increase

Here is the part the headlines skip: according to Moody's, the increases are being absorbed mostly by contractors, not developers, thanks to fixed-price contracts and materials bought in advance. Developers, in turn, cannot reprice units already sold: Samana Developers, with 91% of its units already placed, says so explicitly through its CEO: we bear the additional costs internally, we will not pass them on to our buyers. Even in the heaviest scenario, Moody's estimates a 1.5-2 percentage point annual impact on developers' gross margins: meaningful for them, not for those who have bought.

The read for buyers

• Off-plan buyers have their price locked by contract while the cost of building the same home rises: the gap between price paid and replacement cost works in their favour
• Future launches will bake the new costs into price lists: today's prices are, in all likelihood, the lowest this cycle will show for new product
• Developer selection matters more than ever: financial strength, procurement chains and delivery track record separate sites that slow down from sites that hand over

Demand remains strong as context: in August, 71% of residential transactions recorded with the Dubai Land Department were off-plan. The market keeps buying new, at a moment when building costs more: a combination that has historically supported the value of what is already under construction.