Dubai property sector shows early signs of weakness following US and Israel’s war against Iran

Dubai’s property market is showing early signs of strain amid the ongoing Middle East conflict, with analysts reporting a sharp drop in transactions and emerging price reductions.

Data from Goldman Sachs indicates that real estate transaction volumes in the UAE fell 37% year-on-year and 49% month-on-month in the first 12 days of March, as tensions linked to the war involving Iran, the United States and Israel begin to impact investor sentiment.

The conflict has challenged Dubai’s reputation as a safe haven for global wealth, particularly after strikes affected parts of the Gulf region, including the UAE. Some property listings are already reflecting the shift, with discounts ranging from 12% to 15% reported by agents. One property near the Burj Khalifa was offered at $650,000, down from $735,000, while an off-plan apartment in Palm Jumeirah was reportedly reduced to around $2 million.

The slowdown comes after several years of rapid growth in Dubai’s property market, driven by an influx of wealthy buyers attracted by tax advantages and investment opportunities.

Shares in Emaar Properties, the developer behind the Burj Khalifa, have fallen more than 26% since the conflict began, reflecting broader market concerns. Analysts at Citigroup warned that the war introduces “considerable risk” to Dubai’s population growth and property demand, forecasting slower expansion in the coming years and potential annual price declines of up to 7% in a bearish scenario.

Despite the downturn, some industry figures say activity has not stalled completely. High-value transactions continue, including the reported purchase of a luxury Palm Jumeirah property by Francis Ngannou, suggesting ongoing interest among certain investors.

Market participants say some buyers are actively seeking discounted opportunities, while others remain focused on long-term value rather than short-term volatility. The situation marks a significant test for Dubai’s real estate sector, as geopolitical instability begins to weigh on one of the world’s most prominent property markets.