Dubai's Danube Group is strategically targeting $4 billion in project launches for fiscal year 2026-27, adopting a more selective approach amidst a significant correction phase in the Emirati property market influenced by geopolitical tensions and rising construction costs.
Key Points
- Danube Group aims for $4 billion in project launches in FY27, shifting to a more selective development strategy due to a correction phase in the Dubai property market.
- The company will launch only two to three projects in FY27, a reduction from its usual six, prioritising substantial sales of current projects before new launches.
- The Dubai property market has slowed over the past three months, with overseas investors becoming more selective and tourist arrivals decreasing due to geopolitical tensions.
- While primary market prices remain stable, the secondary market may see distress sales, and residential rents have softened.
- Increased freight costs due to disruptions around the Strait of Hormuz are raising building material costs, impacting developers.
Dubai-based Danube Group plans to launch projects with a combined sales potential of around $4 billion in 2026-27 (FY27), adopting a more selective approach to new developments amid a correction phase in the Emirati property market, according to Danube Group vice-chairman Anis Sajan.
The real-estate firm expects to launch only two to three projects during FY27, compared with around six projects it would have otherwise launched.
"The market has changed significantly since the geopolitical tensions escalated.
"Earlier, developers could acquire land and launch projects quickly.
"Today, we prefer to ensure that a project is substantially sold before launching another one," Sajan said.
Market Dynamics and Buyer Behaviour
Danube recently launched Greenz by Danube, a townhouse and villa project, where the first phase, with a top-line potential of around $1.3 billion, has received a strong response.
The company has sold nearly 40 per cent of the around 750 townhouses launched in the first phase.
He credited the demand to continued interest in villas and townhouses, along with Danube's track record of delivering projects ahead of schedule.
Sajan said the Dubai property market has slowed over the past three months compared with the period before the recent geopolitical tensions, with overseas investors becoming more selective.
"If I have to be very honest, sales over the past three months have not been the same as they were before the attacks in February.
"The real estate market has definitely taken a hit," he said.
According to him, buyers currently active in the market are largely long-term United Arab Emirates (UAE) residents, including Indians, Pakistanis, Sri Lankans, and Bangladeshis. Tourist arrivals have reduced due to the perception that Dubai is not safe.
"As a result, foreign investment is not coming in at the same pace as before.
"One of the reasons for the decline in tourism is also the summer season, and we will observe an increase during the winter months."
"I believe the market should bounce back within the next six months. Dubai has recovered from every major challenge in the past, and I expect it to do so again.
"For now, buyers have become more selective," he added.
Pricing, Costs, and Business Outlook
Sajan said Indians living in the UAE continue to invest in Dubai real estate, although first-time buyers and overseas investors have become more selective following the recent geopolitical developments.
Property prices have broadly remained stable, he said, adding that developers are unlikely to increase prices in the near term.
"I don't see prices increasing in the near term. This is a period of correction.
"Developers are unlikely to raise prices now.
"The market has gone through a phase where everyone made good money. Now it is time for consolidation," he said.
He added that while primary market prices have remained stable, the secondary market could see distress sales, with some investors selling properties at discounts of 5-10 per cent because of liquidity constraints. Residential rents have also softened.
Sajan said disruptions around the Strait of Hormuz have pushed up freight costs, increasing the cost of importing building materials.
"Container freight rates, which were around $1,500, have increased to almost $10,000," he said, adding that the increase translates into 1-1.5 per cent higher costs for Danube because of its integrated building materials business, while developers sourcing materials externally could see cost increases of 3-4 per cent.
He said the company has absorbed part of the increase in construction costs instead of passing it on entirely to customers.
On the business outlook, Sajan said Danube's real estate business grew around 20 per cent last year, but the company is preparing for a challenging year.
"Last year, our real estate business grew by around 20 per cent.
"This year, I would be lying if I said we would grow by 25 per cent.
"If we break even in our real estate business, I will be satisfied," he said.
However, he expects the group's building materials business to grow by around 20 per cent this year, supported by continued demand and the company's decision to keep importing materials despite higher freight costs.
Danube Group's 2025-26 revenue stood at $4 billion.
Sajan also acknowledged that the market could face some oversupply following the large number of launches before demand moderated but remained confident about Dubai's long-term prospects.
"The next six months will be important. Developers with strong balance sheets and the ability to absorb this phase will survive.
"Those without that strength may find it difficult.
"However, Dubai has demonstrated its resilience before," he said.
