Dubai real estate companies are actively exploring the possibility of entering the Islamic bond (sukuk) market, planning to take advantage of record demand for luxury properties in the Middle East’s financial center. According to sources close to the situation, Sobha Realty is already consulting with potential investors in the UAE and London about a possible issue of dollar-denominated sukuk. The main purpose of raising funds may be to acquire new land plots in promising areas of Dubai, Bloomberg has reported.
In parallel, another luxury developer, Omniyat, is also actively evaluating the possibility of issuing its own Islamic bonds in US dollars, which will be the company’s debut entry into this market. According to people familiar with the situation, the funds raised will help the company finance the implementation of ambitious new projects that it plans to launch this year. While the specific details and volume of possible transactions are currently open, the typical target for such issues is hundreds of millions of dollars.
Dubai’s property boom faces global risks
While Dubai’s property sector has seen exceptional growth over the past four years, with prices up more than 70%, experts are starting to signal potential risks and a slowdown. Global turmoil triggered by US President Donald Trump’s new tariff policies, as well as volatility in global oil markets, is already making investors more cautious about the sector’s future potential. As a result, yields on some UAE developers’ sukuk, including Sobha Realty’s due in 2028, have risen sharply, indicating an increase in risk premiums for such instruments.
Despite this, developers continue to insist that current demand remains strong and new projects, especially in the luxury segment, are finding buyers quickly. Sobha Realty, for example, was among the top three developers in Dubai last fiscal year, selling more than AED 21 billion ($5.7 billion). This is evidence that investors are still interested in the city’s real estate market, albeit cautiously.
Omniyat is betting on the ultra-luxury segment
Meanwhile, Omniyat, a company specializing in ultra-luxury real estate, is also preparing to strengthen its position by raising funds through Islamic bonds. Last year, the developer sold AED 2.94 billion worth of properties, confirming steady demand for exclusive projects. Omniyat already has a successful track record of raising financing: in January, the company received a $100 million loan from Japanese financial giant Nomura Holdings for one of its large-scale projects in Dubai.
The company said it is constantly reviewing various strategic opportunities in line with its long-term development vision. The potential sukuk issuance will allow Omniyat to implement even more ambitious plans, including the construction of new landmark properties that will attract the attention of foreign investors and wealthy buyers. Thus, the Dubai real estate market remains active, but developers need to closely monitor global economic trends to maintain a stable flow of capital.