A breather more than correction: How Dubai’s red-hot real estate market stood up to missiles and drones

At the start of this year, Dubai’s real estate market was running at full throttle—record transactions, rising prices and a skyline that seemed to grow shinier by the week.

The pitch was as much emotional as financial. In a world of rising global trade volatility, Dubai—one of the seven emirates in the United Arab Emirates (UAE)—was sold by brokers and developers as certainty; a place where families felt safe and buying a home felt less like a risk than a delayed decision.

Dubai’s real estate boom stood out in comparable global markets. Singapore’s private residential market rose 3.3% in 2025, according to its Urban Redevelopment Authority, after a 3.9% rise in 2024. Hong Kong moved in the opposite direction: Reuters, citing Hong Kong Rating and Valuation Department data, reported that home prices shrank nearly 30% from their 2021 peak before stabilizing in 2025.

While the boom in UAE real estate was centred in Dubai, other emirates did well, too. Abu Dhabi, the UAE capital, also had a record year in 2025, with the Abu Dhabi Real Estate Centre reporting AED 142 billion across 42,814 deals, up 48% in value and 52% in volume from 2024. Ras Al Khaimah, a smaller market increasingly shaped by waterfront, branded and tourism-linked projects, recorded AED 12.4 billion in residential sales across 6,600 transactions in 2025, according to property consultant Cavendish Maxwell. The emirate, in fact, may have predicted a cooling market: off-plan deals accounted for most activity with sales value falling 24.7% year-on-year. (Off-plan sales are deals done at effectively lower prices with the developer throwing in some facilities and services for free, easier financing terms and allowances for delayed payments).

Missiles, drones, correction

Dubai entered 2026 from a boom.

It was in this landscape that the US-Iran war began in late-February.

What should have been a normal real estate cycle of correction came from the war.

Transaction volumes began to fall as the conflict unfolded, with deals dropping both year-on-year and month-on-month by early March. Transactions fell 24% from 17,398 in January to 13,238 in March, coinciding not only with the regional conflict but also with the month of Ramadan, when sales generally tend to dip.

However, total Q1 2026 sales of 52,266 transactions remain higher than the 45,474 Q1 sales of 2025. An official DLD statement asserted that real estate performance in Dubai remained strong in Q1 2026, with “total transactions reaching AED 252 billion, marking a 31% year-on-year increase in value and a 6% rise in volume, reflecting sustained momentum and investor confidence”.

By the end of April, though, sales stood at 13,812—activity thinning from 21,630 transactions in February 2026, the last pre-conflict and non-Ramadan month. That is a 36% drop in sales from its all-time high growth sprint.

The regional conflict and attacks on the UAE have sparked an interesting reaction among expats who live here long-term under the government’s Golden Visa programme.

“Everyone is Emirati through their love of this land,” UAE President Sheikh Mohamed bin Zayed Al Nahyan said a week after the Iranian attacks began. In a nation home to nearly 200 nationalities, this sentiment resonated and set off a nationwide ‘We are all Emirati’ campaign to express solidarity in difficult times.

“There was a shared pride also amongst expats in the UAE's strength to defend and even more in their unflinching stand of non-retaliation,” said Dr Miniya Chatterji, chief executive officer (CEO) of Sustain Labs Paris and a Global Leadership Fellow at the World Economic Forum. “The UAE had demonstrated military strength, yet it had chosen the path of patience and peace. It was a role model for all that we had taught our children to be. And so, a few thousand left Dubai while more than three million residents like us have decided to stay.”

A sharp slowdown, for now

The Emirati sentiment may be strong but real estate momentum has all but ground to a halt. Data from key residential communities shows the shift clearly. According to numbers on Property Finder, one of the biggest online brokerage platforms in Dubai, monthly transactions in Jumeirah Village Circle have fallen from an average of 1,333 over the past year to 541 in the last month. In Dubai Marina, volumes have dropped from around 3,200 annually to just 125 in the most recent month.

The slowdown is much sharper in smaller, high-end markets. Villa transactions in Palm Jumeirah and Al Barari have dwindled from about nine deals a month to just two each in the past month, reflecting how quickly sentiment-driven segments can freeze.

Prices, however, have held steady across most segments—for now. In Jumeirah Village Circle, rates remain around AED 1,500 per sq. ft., suggesting end-user demand is intact. In prime markets, price movements appear even distorted: a spike in Marina to AED 2,902 per sq. ft. in the last month is likely a function of low volumes rather than broad-based demand.

According to a Q1 2026 snapshot by Allsopp & Allsopp, a large real-estate firm in Dubai, transaction volumes across the market are down 18% quarter-on-quarter, even as prices have risen 14% over the quarter and 19% year-on-year.

The slowdown is uneven. Apartments and off-plan sales have taken the sharper hit, with volumes down as much as 25% in some segments and 22% in off-plan. Villas and townhouses, by contrast, continue to see price growth, with average values up 43% year-on-year.

Change in texture of demand

Buyers are not exiting the market en masse, but they are becoming more selective. There is a shift away from speculative bets to ready, end-user-driven purchases where good deals are appearing.

In Jumeirah Beach Residence (JBR), one of the city’s most active investor entry points, brokers say that while interest has not disappeared, its texture has changed.

“Investors are still scouting, but they are looking for under-market deals now,” said Kian O’Neill, a broker at Luxfolio Real Estate with a focus on JBR and Dubai Marina. “And for many long-term renters, this feels like a window to finally step in.”

Distress selling remains limited. “There is some panic from highly leveraged buyers,” O’Neill said. “But most investors here are long-term. They’ve already seen gains and they are willing to ride this phase out.”

Jay Dave, a tech professional from Seattle who is considering a move to Dubai, says he was drawn by the city’s rapid emergence as a global tech hub and its intentional focus on attracting talent.

“Dubai offers a uniquely welcoming environment for expats, something that’s hard to find consistently across the world,” he said, adding the city-state’s infrastructure and quality of life as decision-benders. “This war seems like a blip. We don’t see it changing our view fundamentally.”

Off-plan action

Investors in India are still looking for opportunities to enter the market hunting for deals in the off-plan segment, where covid-style offers are returning.

Post-covid, the Golden Visa programme became the bridge to long-term residency in the UAE, allowing a way for expats to think of the UAE as home. It engineered a construct that decoupled employment and residency in the country.

For the Indian diaspora, who represent 22% of all property transactions in Dubai, this is a fundamental shift. Indians invested over AED 35 billion in 2024 alone, according to a report in The Times of India.

What is making it a durable investment for many among Indian buyers is the number of off-plan properties on offer. Developers have begun reintroducing incentives reminiscent of the post-covid cycle: extended payment plans, reduced booking amounts and fee waivers. These structures lower the upfront commitment, allowing buyers to enter the market while deferring risk.

Dubai’s off-plan market has been running at near-record intensity, with industry estimates suggesting well over 150,000 units were launched in 2025, driven by large master-planned communities and a surge in branded developments. Established players such as Emaar Properties, DAMAC Properties and Nakheel have been joined by new entrants including Aldar Properties, whose recent Dubai launch underscores growing competition for high-end buyers. The breadth of supply, from ultra-prime waterfront villas to more accessible apartment projects, reflects a market still anchored in overseas demand, even as momentum begins to moderate.

None of the real estate companies responded to requests for comments for this story.

Much-needed breather

Long-time brokers say the current time-out was long needed because the market had run too hot and there was a lot of froth.

“This current cycle is a necessary transition for a market that has grown at a record-breaking pace,” said Inder Bhagnani, founder at RK-RE, a brokerage in Dubai since 2008.

Until 2021, there were about 4,000 brokers in Dubai. Last year, there were some 40,000. “Everyone wanted a piece of the pie,” said Bhagnani.

There are stories of Uber drivers getting off to give their passengers a viewing and waiters moonlighting as real-estate agents. Others remember buyers fighting each other for luxury villas on the Palm less than two years ago, sometimes arriving with blank cheques to outbid competition.

Now, transactions in high-end luxury villas in locations like the Palm are worst hit, while mid-tier properties seem less impacted. For, underlying fundamentals —population growth, infrastructure spending, and Dubai’s positioning as a global capital hub—remain intact.

Capital is not exiting, said one broker, but it is waiting. “The minute this war is over, the prices will stabilize,” said Bhagnani.

A case in point is Marissa Peer, a British therapist and former Los Angeles resident who moved to Dubai because she found it safer than LA. Recently, when she wanted to sell her second home in Dubai and brokers approached her with deals with knock-down prices, she said no. “I’m not panic selling. This will pass and I will wait until it does.”