Property sales in Dubai have fallen "off a cliff," according to a leading market watcher, as the Middle East conflict has triggered a dramatic slowdown in one of the world's most expensive real estate markets. Sales in the city dropped 19% in May compared with the previous month, accelerating from a 4% decline in April, according to researcher ValuStrat. Transactions are now below half their level compared with 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, a Dubai-based consultancy that has tracked the city's property market since 2014. A separate study from Reidin, a Dubai-based research firm, found that property worth 22.5 billion dirhams ($6.1 billion) was sold in May, 42% below the April figure and about half the 46.6 billion dirhams sold in the month before the conflict began.
Impact of War on Luxury Market
Dubai, located on the eastern side of the Arabian Peninsula, had experienced a frenzied property trade in recent years, fueled by high-earners attracted to the city's zero income tax policy. However, the outbreak of war in the Middle East in late February has rocked the market, with an Iranian missile hitting a five-star hotel in Dubai's Palm Jumeirah area in March. Sellers of luxury villas and flats have wiped tens of millions of pounds off asking prices, according to property agents.
Yasin Valimulla, a buying agent in Dubai specializing in properties worth at least $10 million, said that the few home sales still occurring are at a 20%-25% discount to their pre-conflict value. "We have sold to super-high-net-worth guys in the last year and a half – every single one of them has now left Dubai," he said. "There was a lot of panic in March, and there is still not much clarity to this day. 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."
Market Correction Underway
This marks a sharp correction for Dubai, which was the busiest city in the world for luxury real estate last year. According to Knight Frank, more homes worth $2.5 million to $10 million were bought in Dubai than any other city at the end of 2025, ahead of London, New York, Los Angeles, and Hong Kong. In the $10 million-plus bracket, there were 9,050 sales in Dubai compared with 6,577 in New York and 3,089 in London. However, Valimulla noted that the market is now correcting itself. "The numbers were so high to begin with, especially in the last two years. The market at that level was not sustainable anyway. There is going to be a correction in pricing; we just do not know the impact of that correction until we have geopolitical clarity."
In the meantime, the nomadic super-rich class are turning to other international hubs such as Milan, London, and Singapore. Richard Waind of the real estate group Cencorp added that several brokers in Dubai's once-booming property market would now be forced to close. "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."
