Dubai’s once-thriving property market has experienced a significant deceleration amid the ongoing Middle East conflict, with home sales and transaction values plummeting in recent months, according to a recent report.
Sharp Decline in Sales and Transactions
Property sales in the emirate dropped 19 percent in May compared to the previous month, according to research firm ValuStrat. This marks a worsening from the 4 percent decline recorded in April, as reported by The Guardian. Transaction volumes also fell to less than half the levels seen during the same period last year.
“The ready homes market has not recorded an annual decline of this magnitude since the pandemic,” said Haider Tuaima, head of real estate research at ValuStrat.
Separate data from Dubai-based research company Reidin showed that properties worth 22.5 billion dirhams ($6.1 billion) were sold in May, down 42 percent from April. This figure is also roughly half the 46.6 billion dirhams recorded in the month before the outbreak of conflict in the region.
Impact of Regional Conflict
Dubai's property market had experienced a sustained surge in recent years, driven by an influx of wealthy expatriates attracted by the city's zero-income-tax regime and luxury lifestyle offerings. However, the regional conflict has unsettled investor sentiment and slowed demand across key market segments.
Industry observers say uncertainty surrounding the security situation has particularly affected the luxury housing sector. Property agents report that sellers of high-end villas and apartments have significantly reduced asking prices to attract buyers.
“We have sold to super-high-net-worth guys in the last year and a half – every single one them has now left Dubai,” said Yasin Valimulla, a Dubai-based buying agent specialising in ultra-luxury properties. “There was a lot of panic in March and there is still not much clarity to this day,” he added, as quoted by The Guardian. “Western European buyers are now more reluctant to buy properties here. I think they want to wait out maybe a year, even two years. It depends on how things play out.”
According to Valimulla, the limited transactions still taking place are being completed at discounts of 20-25 percent compared with pre-conflict valuations.
A Reversal of Fortune
The downturn marks a significant reversal for a market that was among the world's most active luxury real estate destinations. Dubai led global sales of homes valued between $2.5 million and $10 million last year, outperforming cities such as London, New York, Los Angeles, and Hong Kong. It also recorded substantially higher sales in the ultra-luxury segment, with properties worth more than $10 million.
Analysts, however, say some level of correction was inevitable after years of rapid price growth. “There is going to be a correction in pricing, we just do not know the impact of that correction until we have [geopolitical] clarity.”
Alternative Destinations and Brokerage Impact
Market experts say wealthy international buyers are increasingly looking at alternative destinations such as Milan, London, and Singapore while uncertainty persists.
Richard Waind of real estate group Cencorp said the slowdown is also likely to reshape Dubai's brokerage industry. “The war has been a black swan event that was huge and swift,” he said. “The slowdown in sales is putting pressure on those smaller agencies that set up in a frothy market. There were about 1,000 brokers in the market a decade ago – now it’s about 10,000. That is going to fall.”
