Just over a year after moving to Dubai, a media professional using the pseudonym Steve found himself moving up the property ladder unexpectedly.
A cooling Dubai real estate market, driven by the Middle East war, let him land a larger apartment closer to work. He now pays 15 percent less rent than at his previous residence, he said, asking for anonymity given the topic's sensitivity in Dubai.
Why are Dubai real estate prices falling?
Dubai real estate prices are falling because the Middle East war has shaken confidence in a market long seen as insulated from regional instability. Fighting reached Dubai directly in February, and the city's reputation as safe "no matter what" has not fully recovered. Sellers now have less leverage, and buyers are negotiating harder.
When Steve arrived in Dubai in 2025, competition for housing was fierce. "It was really difficult to get a place in this area and the rents had gone up by a lot," said the 35-year-old.
Dubai's property market, a pillar of its economy, had surged for years, fueled by international high-net-worth arrivals drawn to the emirate's lifestyle. But the war that broke out in late February slowed that growth sharply. Iran's retaliation against US allies in the region struck targets in Dubai during the conflict's early days.
Has the war damaged Dubai's image as a safe haven?
Even landmarks like the Burj Al Arab and Palm Jumeirah came under fire, a blow to a city where more than 90 percent of residents are foreign nationals. Hostilities resumed in July after an April ceasefire, though Dubai itself has stayed out of the renewed fighting. Still, a real estate agent, speaking anonymously, said the city's safe-haven image has yet to fully recover.
Is now a good time to buy property in Dubai?
Opinion is split. "We are in some sort of grey area. I'm getting a split sentiment: people think this has destabilized the region for a long time, and there are people who say this is the right time to invest," the agent said.
Clients have not vanished, she added, but negotiating margins have widened considerably. "Since the war, the market's shifted from a seller's market to a buyer's market," she said. British consultancy Knight Frank reported prices easing across the mainstream market by 5 to 20 percent depending on location, following an average 82.9 percent surge since 2021.
How much have Dubai property sales dropped in 2026?
Dubai real estate has weathered downturns before, notably the 2008 financial crisis and the Covid-19 pandemic. A report from agency Betterhomes, citing official figures, found sales transaction values fell 45 percent year on year in the second quarter of 2026, with the luxury segment hit hardest.
Despite the decline, major developers are signaling confidence. Emaar announced a $55 billion project in central Dubai last month, aiming to attract roughly 150,000 residents. Developer Binghatti said it sold two luxury apartments in June for $54 million and $19 million respectively.
Will Dubai's property market recover?
Betterhomes chief executive Richard Waind said conditions have improved in recent weeks despite the grim quarterly figures. "We're starting to see demand increase again through June and then into this month, both in terms of buyer activity and buyer deals happening," he told AFP.
Demand is currently driven mainly by Dubai residents rather than foreign investors, Waind said. He noted the summer months are traditionally slow for the market and expects investment to recover as the season ends.
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