Dubai property sector shows early signs of weakness
Some properties are already being offered at big discounts
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[DUBAI] Dubai’s property market is beginning to show early signs of weakening three weeks into the US-Israeli war on Iran, with data from analysts showing tanking transaction volumes and some real estate agents pointing to price reductions.
The war, and Teheran’s strikes against Israel, US bases and Gulf states, including the United Arab Emirates (UAE), have pierced Dubai’s image as a safe haven for the world’s wealthy.
Real-estate transaction volumes in the UAE fell 37 per cent year on year in the first 12 days of March, and 49 per cent month on month, Goldman Sachs analysts estimated in a note published this week.
Some properties are already being offered at big discounts, with price cuts of 12 to 15 per cent, according to some real estate agents and messages on social media that Reuters reviewed.
For instance, a seller was looking for a “quick sale” for a property close to the Burj Khalifa – the world’s tallest building – a message shared by an agent read.
The seller was looking for US$650,000, down about 12 per cent from a previous price of US$735,000, “due to the current situation”.
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The agent spoke on condition of anonymity because of the sensitivity of the matter. An off-plan flat in Dubai’s coveted Palm Jumeirah was also being offered at a 15 per cent discount to its original price of around US$2 million, according to a message reviewed by Reuters on a WhatsApp group created a week into the war.
Heading for a slowdown?
The UAE’s real estate boom has mirrored Dubai’s rise, but there were already concerns that the market was headed for a slowdown after five years of rising prices. The conflict is the biggest test to date for the market, where demand was fuelled by an influx of wealthy migrants attracted by the UAE’s tax-free regime.
Shares in property developers have fallen, with Emaar Properties, the developer behind the Burj Khalifa, down more than 26 per cent on the Dubai bourse since the war began.
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Goldman Sachs said the total value of completed transactions so far this month was down by half compared with February – a much bigger drop than during the 2024 Dubai floods or a previous Iran-Israeli conflict last June – although it said the median transacted price was only down 3 per cent from a year earlier.
Analysts at Citi said the war introduced “considerable risk” for Dubai’s future population growth expectations as it could deter homebuyers and property investors. They now assume 1 per cent population growth in Dubai this year, and 2 to 2.5 per cent annually between 2027 and 2031, against 4 per cent in recent years.
They said that in their bearish case for Dubai, property prices would drop by an average of 7 per cent annually between this year and 2028.
Activity has not stopped
However, executives on the ground are not panicking, saying market activity has not stopped.
“I believe everyone is very different in how they assess risk and how they perceive risk. But the data tells a very clear story, right? Transactions have not stopped,” said Imran Sheikh, founder and chairman at real estate investment firm BlackOak.
“We have one client from Africa who has said, if you see any opportunities over the next month, please go ahead,” he added.
One circa-US$25 million off-plan unit on the Palm was sold to former Ultimate Fighting Championship heavyweight champion Francis Ngannou this week, which developer Arada said “underscores continued investor appetite for branded luxury residences in Dubai”.
“There are many investors who are calling us to ask if you have clients who want to sell at distress or anybody who sells at a discount, (and say) we are ready to buy it,” said Himanshu Khandelwal, CEO at Dubai-based investment firm Asas Capital, citing Emirati clients and Indian family offices.
Emaar Properties founder and chair Mohamed Alabbar was sanguine, telling CNBC earlier this month that “nobody wants to budge” on price.
“At present, we are not seeing widespread discounting, as most buyers remain focused on long-term value rather than short-term price fluctuations,” said Tauseef Khan, the founder and chair of Dugasta Properties. REUTERS
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