Impact of US-Israel-Iran Conflict on Dubai's Mid-Segment Real Estate Market
The ongoing US-Israel-Iran conflict is causing ripples in Dubai’s real estate market, with the mid-segment housing category likely to feel the most significant impact. Real estate experts predict that buyers who have already booked homes may seek to renegotiate terms or secure higher discounts, while prospective purchasers are likely to adopt a wait-and-watch approach until the situation stabilises. Some investors could also redirect capital towards premium residential projects in India.
If the conflict continues, the market may experience a broader moderation in transaction volumes, new launches, investor sentiment, and overall buying appetite. Mid-market buyers are expected to negotiate more aggressively in the coming months, while developers may defer new project launches. High-net-worth individuals (HNIs) could reassess the timing of large-ticket investments and become more cautious about new commitments. Prolonged uncertainty may even prompt a modest shift of capital from Dubai to India, at least in the near term.
Amit Goenka, CMD of Nisus Finance, explains that if the US-Israel-Iran war drags on, the Dubai real estate market could witness a pullback in momentum across volumes, new launches, investor sentiment, and overall appetite. Buyers may adopt a wait-and-watch approach or negotiate harder for better bargains in the next few months, but everything depends on the duration of the conflict. In February, the company announced the expansion of its UAE property portfolio with a ₹247 crore investment in residential apartments in Majan, Dubai.
Goenka adds that after price growth of 18% last year and 24% the year before, similar appreciation levels may not be sustained in the near term. New launches could be deferred, and HNIs may reassess the timing of major investments. In the mid-market segment (properties in the ₹3 crore to ₹8 crore range), negotiations are expected to intensify, with end users seeking better deals and investors becoming more conservative about new commitments. High-value transactions are therefore likely to remain muted for some time, as HNIs may defer large-ticket purchases.
Amid broader sell-offs in financial markets, there could be a temporary flight to safety, with commodities such as gold and silver gaining traction. At the same time, equities and property remain under pressure. Other experts note that while there is no clarity on how long the current situation may persist, Dubai has historically demonstrated resilience, rebounding swiftly from disruptions such as the COVID-19 pandemic and the 2008 Lehman crisis.
Rizwan Sajan, founder and chairman of Danube Group, states that at this stage, the impact on the real estate market appears to be driven more by sentiment than by any fundamental structural shift. It would be premature to draw any long-term conclusions at this point. While developments like these can create temporary uncertainty, the underlying fundamentals remain resilient. He remains confident in a steady and sustainable path of growth ahead.
Dubai’s appeal as a property investment hub lies in its tax-friendly regime, residency-linked investment framework, and attractive rental yields of almost 6–8%. Property prices have climbed 20–40% over the past two years, supported by strong global demand. Indians accounted for 10% of property sales in Dubai in 2025, up from 6% in 2024, according to a Knight Frank report. Several Indian real estate firms are also developing projects or planning new launches in the region.
The buyer mix is also important to understand. The ₹3–8 crore mid-segment is largely supported by professionals and resident buyers, many of whom rely on mortgages. Ticket sizes above that are dominated by HNIs investing in ultra-luxury properties that offer lifestyle value alongside returns. The ₹3–8 crore price segment is virtually absent in prime Dubai locations; such budgets are typically suited to areas like Ras Al Khaimah, Silicon Oasis, Furjan, and Ajman, explained a real estate expert who asked not to be named.
Investor interest for ultra-high-end properties broadly comes from two segments: ultra-high-net-worth individuals, including Indian business owners and Bollywood stars who invest in prime Dubai properties. A report by Knight Frank said demand for villas outpaced apartments among HNWIs in 2025, with branded residences also emerging as a preferred choice.
During periods of geopolitical uncertainty, property markets typically enter a phase of caution. Buyers tend to adopt a wait-and-watch approach, postponing deal closures until there is greater clarity. If tensions persist, some investors may delay purchases or negotiate more aggressively. In the short term, demand could moderate as decisions are deferred, and rental yields may also come under pressure, say real estate experts.
What happens next will depend largely on the duration of the crisis. A prolonged situation could lead to a sentiment-driven pause, slower transaction volumes, price corrections, and stronger buyer-side negotiations before stability returns. Pyush Lohia, Managing Director of Lohia Worldspace, notes that while there is no panic selling at this stage, there is a clear ‘wait-and-watch’ approach among buyers. In the short term, this could slightly slow down sales activity as investors take time to reassess risks and timelines before making new decisions, particularly with a large number of new units expected to enter the market this year.
The Dubai market offered attractive rental yields of 6–8%. In the short term, rentals could see some pressure, with leasing activity expected to remain subdued for the next six to eight months. Rentals may decline by 5-7%, said an expert. As for new project launches, they may be postponed by 2 to 3 quarters if uncertainty persists, leading to a slowdown in new supply. Notably, this year was projected to see a record supply of nearly 1,20,000 units, but prevailing risks could trigger a temporary correction in the Dubai market, said experts.
Morgan Owen, managing director, Middle East and North Africa at ANAROCK Group, has said that investment redirection is possible. Indians and other NRIs make up one of Dubai's biggest groups of buyers, accounting for about 10% of sales in 2025. They are drawn to the high returns and low taxes. If risk perception increases consistently, a small but significant shift of capital from Dubai to India is possible, he said, adding that Dubai’s structural appeal is likely to prevent abrupt or impulsive reallocations.
Gaurav Gupta of Zeno Realty is of the view that the current uncertainty in Dubai may prompt a small fraction of Indian HNIs to re-evaluate allocations, including to premium Indian markets like Gurugram. But we’re talking about a few hundred HNIs at best in the near term, and at this stage, he doesn’t see it triggering a meaningful capital exodus. Dubai today is a full ecosystem infrastructure, tax efficiency, lifestyle, regulatory clarity. One episode is unlikely to reverse that flywheel. Only if this uncertainty were to persist over a prolonged period, then yes, capital could meaningfully diversify toward hubs like Singapore, London, or even Indian luxury corridors. But as long as it’s a one-off incident, then it’s only a near short-term issue than the beginning of a structural shift in capital flows.
Experts concurred that it is unlikely to be a large-scale shift of capital to other countries, as few cities offer the same combination of affordable luxury, lifestyle appeal, and global connectivity as Dubai. As for whether investors would liquidate assets in Dubai and redeploy capital into India, that appears unlikely.
