Dubai's Real Estate Market Takes a Hit as Sales Plunge 40%

From February 28 to March 22, Dubai registered 8,059 property sales, marking a 44% year-on-year decline. The decline is attributed to the ongoing conflict in the region, which has spooked investors and disrupted the real estate market.

On February 28, the US and Israel launched strikes on Iran, leading to a series of Iranian retaliatory strikes against American assets and allies in West Asia. This conflict has had a significant impact on the real estate market in Dubai, which is a global aviation hub and a popular destination for property investors.

During the period from February 28 to March 22, the Dubai Land Department (DLD) recorded 8,059 property sales. Analysts attribute the significant drop in sales to the war and its spillover effects, which have scared investors away from the market.

Erratic flights to the region, particularly the on-and-off closure of the Dubai airport, have had a considerable impact. While it is possible to buy property in Dubai remotely through intermediaries, many potential buyers prefer to visit the emirate to inspect the property before making a purchase. A Mumbai-based property dealer with interests in the emirate noted, “That has not been happening since the war broke out, and the frequent cancellations of both scheduled and chartered flights are keeping would-be purchasers away from the market.”

The conflict has affected several cities in the region, including Dubai, Abu Dhabi, Doha, and Kuwait, as they have been hit by Iranian drones and missiles. This has further dampened buyer sentiment. Non-resident buyers in Dubai can purchase property through notarized power-of-attorney issued to DLD-accredited brokers, property consultants, lawyers, and friends or family based in Dubai. However, the frequent cancellations of flights have disrupted these plans.

Despite the significant decline in sales volumes, home prices have only dropped by 4-5% compared to the year-ago period. The median value of a residential property in Dubai is around $99,250, with a per square foot price of about $500. A Dubai-based real estate consultant, speaking on condition of anonymity, said, “This trend shows that the investor class is largely staying away from the market, or at least they have taken a pause given the current circumstances.”

In Downtown Dubai, the prices remain steady, and large deals are still being concluded. According to large brokers, mid-segment residential prices in Downtown Dubai and its surrounding areas range from $480 to $700 per square foot. Some luxury and ultra-luxury projects are fetching more than $2,000 per square foot.

Chintan Vasani of Wisebiz Realty believes that the current phase of pause may be followed by a slow and steady build-up in sales and inquiries, especially if the conflict begins to subside. Brokers are also finding some comfort in the fact that the significant expatriate population, which makes up nearly 90% of the real estate market, is largely maintaining residence in Dubai.

Over the past few weeks, some countries have evacuated their citizens, while others have left the UAE for their home countries either due to the conflict or for Eid. However, the overall sentiment remains cautiously optimistic that the market will recover once the situation stabilizes.