UAE banks are healthy but choosy. So who will fund Dubai's office owners?

UAE bank loan growth is expected to slow to 8% to 10% this year, and the strongest banks are turning down deals whose returns do not justify the capital. Dubai's banks are not retreating from offices, but they are choosing. Strong balance sheets let them say no to deals whose returns do not justify the capital. So an owner of a stabilised Grade A building and an owner of a half-empty floor plate meet two different credit markets.

How strong are the banks that lend to offices?

Very strong, by the numbers. Fitch Ratings says the UAE banking sector has entered a period of potential vulnerability "probably in the best shape in the last 15 years", according to Enterprise's report of June 2026.

The same report puts non-performing loans at about 3%, near historic lows, and return on equity close to 20%. Most banks kept solid capital and liquidity ratios in the first quarter of 2026, and many still grew profits while adding provisions.

That is the starting point. It explains why banks can afford to be picky.

Why is corporate real estate still the worry?

Fitch's senior director for Middle East bank ratings names corporate real estate as the biggest asset-quality risk for the sector. That describes direction, not distress. The same analyst expects cost of risk and asset quality to deteriorate gradually, not suddenly.

Fitch also expects loan growth of 8% to 10% this year, down from the pace after the pandemic. Growth that slows means each new loan must work harder to earn its place on the balance sheet.

Supply adds pressure for offices. Savills reports about 1.9 million sq ft of Dubai office space due for delivery in 2026, and a pipeline of more than 4.2 million sq ft by 2030. Lenders look at that pipeline when they price a refinancing.

What does tightening look like in practice?

The Enterprise report quotes a managing director at Alvarez & Marsal Portfolio Advisory in Dubai, who says the strongest banks are rejecting deals where the return does not justify the capital. They also review their risk appetite more often, at board level.

Three signs of tightening appear in the report:

• Underwriting is more prudent, and loan growth steps down from the double-digit gains of recent years.
• Deposit pricing has risen, because banks compete for funding.
• Several banks have booked management overlays, which the report describes as caution, not observed damage.

For an office owner, this means the answer is rarely a flat no. It is a lower loan, a higher margin, or a request for more equity. Assets with long leases and strong tenants clear the bar. Assets with short leases, vacant space or many small owners face more questions.

What else is pressing on lenders?

Offices are one part of a wider picture, and the picture shapes how banks think. The Enterprise report lists several pressures that sit beside real estate:

• Higher rates. The report says the US Federal Reserve is widely expected to raise rates before year-end, and that Gulf central banks, including the Central Bank of the UAE, would follow because of the dollar peg. Fitch's view is that higher rates should keep supporting banks' net interest margins.
• Slower growth. Fitch's analyst says the growth chances of the years after the pandemic "probably aren't there anymore".
• Costlier funding. Banks confirmed more competition for deposits, which raises their own cost of money.
• Weaker activity. The report says the bigger risk is weaker fee income, slower activity and rising credit costs arriving together.

Residential supply adds to the mood. The report cites a UBS Bank analysis that points to up to 110,500 homes delivered in Dubai in 2026, against a ten-year average of about 27,000. That is a homes figure, not an office figure, and we do not read it across. But it explains why credit committees look harder at every property exposure at the same time.

For an office borrower, the message is practical. A bank that is watching its own costs will price risk more carefully. A loan that looked routine two years ago may now need a stronger case.

Where does private credit fit?

Private credit is the new option, and it has a legal base. According to the Chambers 2026 debt finance guide, Dubai's financial centre created a credit fund regime in 2022. ADGM issued its Private Credit Fund Rules in 2023, which let funds and their managers originate and invest in private credit.

The same guide still calls the UAE "largely" a bank-led market. It adds that private credit providers play a growing role, often working with the banks. Bank and non-bank lenders therefore work as partners more than as rivals.

One practical reason is security. The guide says some security, such as mortgages over onshore land, can only be granted in favour of locally headquartered banks licensed by the Central Bank. Where such security is taken for an international creditor, a local bank must act as security agent. The guide adds that these limits may or may not apply in a free zone. A fund can provide the money, but a bank often holds the paper.

What should an office owner do with this?

Treat the choice of lender as part of the asset plan, not an afterthought. Three steps follow from the evidence above:

• Show the lender what it needs: lease length, tenant quality and a clear business plan for any vacant space.
• Ask early about the security structure, because a local security agent adds time and cost.
• Keep a second route open. A non-bank lender can bridge a gap or a refinancing while the bank stays in the senior position.

These steps follow from the evidence above and are not a rule. Banks may also loosen again if supply is absorbed.

No single lender sets the rule. Terms differ by bank, by building and by sponsor. The test is simple: lenders should be able to name office deals they declined or repriced this year, and say why. If they cannot, banks are less selective than this article describes.

What to watch

• Fitch's loan growth range of 8% to 10%, and whether it holds.
• The size of the Dubai office pipeline against absorption.
• Whether banks publish more detail on real estate exposure.
• New private credit funds registering in Dubai's financial centre and in ADGM.
• Refinancing terms on stabilised Grade A offices, against older stock.

The question for owners is no longer whether a bank will lend, but what it needs to see; join us at “Dubai Office Summit”.

Sources

• EnterpriseAM: Fitch, sector in best shape in 15 years (Lopatin quote)
• Savills: About 1.9m sq ft Dubai office delivery 2026
• Chambers: Financial-centre credit fund regime 2022