Sobha says internal resources lessen war’s pressures on cost

• Group has in-house contractors
• Material expenses reduced
• Launching Sobha City in Abu Dhabi

Dubai-based real estate developer Sobha says it can withstand the rising costs associated with the Iran war because of its strategy of relying on internal resources.

Sobha says its approach helps to limit exposure to war-driven cost pressures and supply disruptions, as many developers face tighter margins and delays. By keeping more of the process in house, it says it has greater control over costs and timelines, though it may not be fully insulated if disruption persists.

“For them [other developers], their most important thing is the bottom line. So they need to squeeze somebody else in the chain to make sure their bottom line is protected. That’s most of the developers. For us, the primary goal is quality,” managing director Francis Alfred told AGBI.

Supplied: Sobha Realty

Sobha operates with a “backward integration” model, moving backward on the supply chain to produce its own raw materials and keep services in house. The group has its own contractors, designers, architects and factories, which together, Alfred said, are mitigating problems. 

“If you want value, you can’t squeeze people. Luckily, there is no contractor giving us external pressure. There are definitely challenges in the market in terms of shipping lines [to get materials] but there are alternative routes,” he said.

“If I said there are no supply chain interruptions, that wouldn’t be true. There are interruptions. What I can say is we are least-affected because we have a lot of local manufacturing. Yes, materials costs have gone up, but if I start [worrying] about my margins … I’m focused on delivering quality products,” he said.

Sobha over the weekend launched sales for its first project in Abu Dhabi: Sobha City, a 38 million square foot project on the edge of Yas Island with a planned 4,000 apartments and 2,500 villas. 

Units start from AED1.3 million for a one-bedroom apartment, going up to AED11.5 million for a five-bed villa.

Alfred did not go as far as saying the war had meant lowering prices, but he called the launch Sobha’s biggest discount ever: “For a Sobha product in that location, it is deeply discounted. This is probably the best pricing Sobha has ever put in the market.”

Sobha Realty reported net profit of AED4 billion ($1.1 billion) in 2025, up 118 percent year-on-year, with a revenue backlog of about AED29 billion providing strong visibility over future earnings, while maintaining a net debt position of AED2.8 billion as of December 2025.

Supplied: Sobha Realty

AGBI reported last month that the UAE capital is seen as a more resilient property market during the war, where much more local money is present. Last year, non-residents accounted for 11 percent of sales in Abu Dhabi, compared to around 70 percent in Dubai.

Asked whether Sobha launched in Abu Dhabi for this reason, Alfred said: “In terms of timing, to be honest, yes you can interpret it that way. But the actual project has been in design and planning for almost a year. Had we had approvals earlier, we’d have launched it then. It just happened to be now [during the war].”

Other developers in the Emirates have decided to hold off on new launches, at least until the next quarter. Sobha, however, said launches will continue as planned. 

“This Abu Dhabi project is a 10-year project, so why wait a few extra months to launch it? As we see the market doing well, we’ll launch more apartments in Abu Dhabi. Based on appetite, we’ll do more launches,” said Alfred. 

Sales fell 24 percent by number of sales in Abu Dhabi between February and March, according to Abu Dhabi Real Estate Centre (Adrec) data analysed by AGBI. Dubai transactions dropped 32 percent in the same period, according to Dubai Land Department data.

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In terms of sales so far, Alfred said the company has never been one to try to sell as quickly as possible. 

“If you’re selling out in your first hour, it means you probably didn’t know the actual potential of that product. In terms of appetite, it is much, much higher than we thought it could be in Abu Dhabi,” he said. 

Sobha’s financial presentation for last year states the developer always plans to sell 50 percent of its new stock within six months of launch.