Property prices are down in Dubai. Is it a war-induced blip, or something more serious?
Dubai’s real estate market has often defied expectations. And the news that the emirate had set a new record in early March for the largest residential land transaction, valued at AED400m ($100m), was no exception. The deal closed shortly after the outbreak of the Iran conflict
And the news that the emirate had set a new record in early March for the largest residential land transaction, valued at AED400m ($100m), was no exception.
The deal closed shortly after the outbreak of the Iran conflict, when multiple missiles and drones were being fired towards Dubai on a daily basis.
But, while announced to much fanfare, the news masked a sharp drop in confidence across the broader market.
Real estate transaction volumes in the UAE fell 37% year-on-year in the first 12 days of March, and 49% month-on-month, according to analysis by Goldman Sachs.
Even before the conflict started, Fitch forecast that real estate prices would undergo a correction–down 15%–during the period from July 2025 until the end of 2026 following a major real estate rally in the wake of the pandemic.
Dubai’s residential property prices surged by roughly 60% between 2022 and early 2025–a historic boom fueled by tax-free incentives, liberalized visa policies, and a heavy influx of high-net-worth individuals.
Read more: The Iran conflict has disrupted oil supply. Gulf states are now looking to multi-billion-dollar investments in renewables
But Fitch said that the combination of weaker economic activity, reduced tourism and slower population growth will now add further pressure on both residential and commercial real estate markets, resulting in a larger correction than initially forecast.
