Despite Regional Tensions, Dubai's Real Estate Market Thrives

The spillover of the American and Israeli bombing campaign in Iran, and Iran's response in bombing American bases in Gulf countries, has not deterred the flow of luxury real estate purchases in Dubai's booming property market. According to prominent real estate brokers and data released by the Emirate's government, the market remains robust.

From February 28, the day hostilities broke out, to March 12, more than 4,800 real estate transactions were reported in the Emirate of Dubai, according to data from the Dubai Land Department. These transactions were worth a total of nearly AED 16 billion (around US$4.3 billion). Of the transactions, around 3,900 were in the form of apartments, while the rest included villas, plots, and commercial properties.

The Dubai Land Department, the emirate's authority to register all deeds for sales and purchases, as well as leases of both residential and commercial property, publishes sales data for all major projects and tracks price movements in the market at or near real time. Major developers such as government-backed Emaar Properties, Nakheel Properties, and Dubai Properties have reported extensive sales. Private developers like Damac and Danube have also seen significant activity in flagship projects such as the Dubai Islands, Jumeirah Village Circle, Dubai Investments Park, and others.

Most major developers have continued with project launches, with discounts being rare. Developers continue to target Indian buyers with staggered payment plans, as well as buyers from countries such as the UK, Russia, Pakistan, and elsewhere. In Dubai, non-UAE nationals are permitted to have full ownership of properties in what are known as 'freehold' zones, designated by the Emirate's government. The Emirate also allows remote purchase and registration of properties by non-residents, largely through notarized power-of-attorneys to lawyers, property consultants, or family and friends based in the country. Nearly 90 percent of property buyers in Dubai are non-UAE citizens.

Brokers noted that the purchases did show a dip in the immediate aftermath of the bombing, particularly at or near prominent properties such as the Burj Al Arab, Burj Khalifa, and others, especially after some of these locations and their vicinities saw drone and missile attacks from Iran. Buyers' sentiments were also affected after both of Dubai's airports were shut amid missile attacks, with operations there still not up to full capacity, and some airlines and chartered flights staying away.

The bulk of the new purchases since February 28 are in 'off-plan' properties, meaning projects still in the planning or construction stage that have started sales. According to brokers, this reflects significant 'optimism', even as sales in the secondary market continue in major residential developments.

Indian investors are in a wait-and-watch mode, showing caution but not negativity. Inquiries are still active, and some are also waiting for distressed deals to emerge, hoping to purchase properties at their budgets if prices drop. From what I have seen, there have not been any significant price drops or distressed deals in the market. Residential prices per square foot in Dubai are continuing to be in the range of AED 1,700 to AED 2,200, with some deals in the Downtown fetching up to AED 10,000, said Ravi Kewalramani, managing partner of Straight Talk REA.

In a recent report, Anarock noted that Dubai's real estate, despite large-scale external shocks such as the global financial crisis in 2007-08 and the COVID-19 pandemic, showed relatively fast recoveries, and property prices rose significantly on the back of capital flows and a diversified investor base.

As the saying goes, calm seas do not make skilled sailors. Historically, moments of geopolitical uncertainty may slow timelines briefly, but they have not weakened Dubai’s long-term property fundamentals. The pandemic proved that clearly. Even when global tourism fell sharply in 2020, Dubai reopened in July that year, achieved vaccination coverage of over 90% by late 2021, welcomed 14.36 million international visitors in 2022, and saw real estate activity rebound soon after, said Ankur Aggarwal, chairman and founder of BNW Developments, a Dubai-based developer.