Dubai home prices fall amid war - first time since 2020

Foreign investors and wealthy expats have helped Dubai's real estate market become one of the most sought-after in the world. But now, amid the ongoing war in the Middle East, which has put pressure on demand, housing prices in the emirate - for the first time since the 2020 pandemic - have fallen, Bloomberg writes, citing data from Dubai-based consulting and research firm ValuStrat.

According to ValuStrat estimates, the house price index in Dubai in March decreased by 5.9% compared to the previous month. However, even taking into account this fall, the index returned to the level of only six months ago, states Bloomberg.

This information also confirms the data of research and analytical company REIDIN, which analyzes data from the Dubai Land Department. According to its estimates, in March the volume of sales of residential real estate in Dubai decreased by almost a fifth compared to the previous month and amounted to a total of 37.2 billion dirhams or $10.1 billion. The number of transactions during this period decreased from almost 16 thousand to about 13 thousand.

Dubai's land department did not respond to the agency's inquiries.

Statistics show the direct impact of the conflict in the Middle East on the real estate market in Dubai: the city has used its status as a "tax-free haven" to attract expats and foreign capital to its real estate market. Their influx eventually helped housing prices in the emirate soar by more than 70% since 2020. Now that momentum is being tested by war, Bloomberg writes.

"The market will not return to its previous state anytime soon, and we believe [the Dubai real estate market] is in for a price decline," said Louis Harding, CEO of Dubai-based brokerage Betterhomes (quoted by Bloomberg). "We expect demand to suffer as it is likely that the [emirate's] population will not grow at the same pace as in recent years, during a period of a significant number of rental apartments," he added, noting that the real estate market in Dubai should prepare for a "weak and challenging" summer.

That said, Sahil Khosla, CEO of SOHO, a developer building luxury high-rises in Dubai, says he doesn't fear a "real estate market collapse": despite the uncertainty, "there are more end users than ever," he says.

These data confirm and Bloomberg surveys of realtors in London, Monaco and Marbella - many of them report an increased interest of wealthy Middle Eastern residents in real estate in Dubai. Foreigners make up more than 85% of the UAE's population.

"I expected sales to be lower in a similar situation, but we are still seeing growth," Imran Farooq, CEO of Samana Developers, another Dubai-based developer, told Bloomberg. "Sales are taking a little longer [than lease deals], but buyers are both in the UAE, Egypt and India," he added.

This article was AI-translated and verified by a human editor