In Dubai, the war in the Middle East is cooling the real estate market

His new apartment, larger and closer to his workplace, now costs him 15% less than the old one.

Upon arriving in the Gulf emirate in 2025, amidst a real estate boom, "it was very difficult to find accommodation in this region and rents were exploding," says this 35-year-old British man employed in the media sector, who speaks under a pseudonym given the sensitivity of the subject in the United Arab Emirates.

Real estate in Dubai, one of the pillars of the local economy, has experienced strong growth in recent years, driven by the influx of expatriates and wealthy individuals attracted by the quality of life, abundance of services and favorable taxation.

But activity has slowed since the United States and Israel launched an offensive against Iran on February 28, prompting retaliatory strikes in several neighboring Gulf countries.

In Dubai, the tourist showcase and business center of the Emirates, iconic sites such as the Burj Al Arab hotel and the artificial island Palm Jumeirah were targeted at the beginning of the war, taking by surprise a population composed of 90% foreigners.

The emirate has not been affected since the resumption of hostilities in early July, but the conflict has tarnished its image as a "safe city no matter what" said a real estate agent on condition of anonymity.

"Grey area"

Today, "we are in a sort of grey area. Opinions are divided: some believe that the conflict has permanently destabilized the region, others, on the contrary, believe that it is a good time to invest," she explains.

The professional assures us that clients haven't completely disappeared, but room for negotiation has increased. Tenants and buyers now find themselves in a position of strength vis-à-vis landlords who were long inflexible.

According to the British specialist firm Knight Frank, selling prices have generally fallen between 5 and 20% depending on the region, after having increased on average by 82,9% since 2021.

The market has experienced many upheavals in the past, particularly after the 2008 financial crisis or during the Covid-19 pandemic.

By announcing last month a $55 billion development project in the heart of Dubai, aimed at accommodating nearly 150.000 residents, the Emirati giant Emaar Properties has shown its confidence in the emirate's ability to continue attracting investors and expatriates.

Developer Binghatti said it sold two luxury apartments downtown in June, one for more than $54 million and the other for $19 million.

According to a report by the Betterhomes agency, based on official figures, home sales fell in the second quarter by 31% in volume and 45% in value, year-on-year, with a particularly marked decline in the luxury segment.

However, the situation has improved in recent weeks, assures its CEO, Richard Waind.

"We have seen a resurgence in demand since June, which is continuing, both in terms of visits and transactions," he told AFP.

The executive acknowledges that this recovery is primarily driven by residents rather than foreign investors.

But summer is traditionally a quiet season and international clientele will gradually return in the coming months, he hopes.