The Financier We Don't See

✍️Islam Zween

When I read Argaam Intelligence's report this week on the profitability of Gulf property developers, one figure stopped me. Binghatti, the UAE developer, lifted its first-half 2026 profit by 64% to around AED 3bn — while operating cash flow moved in exactly the opposite direction, from positive AED 1.1bn to negative AED 1.3bn.

This doesn't mean the company has a liquidity problem, but it raises a question that matters more to me: if profit is recognised before the cash arrives, who funds the distance between the two?

Property, by its nature, requires that distance. The developer buys the land, builds, and pays the project costs, while receiving buyers' money in stages.

The larger the projects, the higher the costs, or the slower the collection, the more capital that distance demands. Part of it comes from the developer's own equity, from banks, and from buyers paying in advance.

But another, less visible part comes from within the project's own delivery chain.

In Binghatti's case, for example, the working-capital drawdown over the period coincided with a roughly AED 3.1bn increase in payables and accruals— and the Argaam Intelligence report records rising trade payables at several other developers too.

At which point I remembered that we had arrived at the other end of this story a few weeks earlier.

In an earlier Argaam Intelligence study on the financial anatomy of the Saudi contracting sector, we found that a contractor waits an average of 111 days to collect what it is owed, while paying its own suppliers within 36 days.

That is a gap of roughly 75 days that someone has to finance. For a contractor with annual revenue of $500mn, the study estimated that around $103mn sits trapped in receivables not yet collected, against only $49mn owed to its suppliers.

At the time we were looking at the contractor as the party executing the project. The numbers said something else: the contractor may also be one of the project's financiers.

This week's report poses the same question from the opposite direction. The developer needs to finance the period between building and collecting.

The contractor needs to finance the period between doing the work and being paid for it. And the supplier, in turn, may extend credit to both before receiving its own money.

So alongside the project's delivery chain, we begin to see another chain — a financing chain that is nowhere near as visible. Not everyone who funds a project is a bank or a shareholder. The buyer who paid in advance is funding it.

The contractor who has done the work and not yet been paid is funding it. The supplier who delivered materials on credit terms is funding it too. And whenever cash is delayed at one point, the need for finance simply moves to another point along the chain.

The difference is that a bank loan appears on the balance sheet and we call it financing, whereas the contractor waiting to be paid, or the supplier granting longer terms, is not usually called a financier — even though, economically, it is performing part of the same function.

Which is perhaps why it is not enough to measure the project economy by project volumes, sales and profit margins alone.

We also need to ask about the cash cycle: how long does money take to travel from the project owner to the developer or contractor, and then to the supplier? And who carries the cost at each stop along the way?

In our earlier study, we estimated that shortening the contractors' collection cycle from 111 days to 60 could release billions of dollars of working capital and raise the sector's capacity to take on new work.

In other words, the constraint is not always the size of the pipeline or the ability to build it, but the amount of capital required to keep it moving.

Every project, then, has a delivery chain we can see, and a financing chain we cannot see nearly as clearly. And sometimes the party we take to be executing the project turns out to be one of the parties funding it.

Which is why the more important question may not only be who builds the project and who profits from it, but who is actually financing it until the cash reaches the other end.
 

Click here to read the full study

You Read It Here First in Argaam Weekend
 

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