DUBAI: Just over a year after moving to Dubai, Steve found himself moving unexpectedly up the property ladder, taking advantage of a cooling real estate market amid the Middle East war.
His new apartment is larger and closer to work than his previous resident, but the rent is nonetheless 15 per cent cheaper, he said, using a pseudonym due to Dubai’s sensitivity on the matter.
When he arrived in Dubai in 2025, “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, who works in the media sector.
Dubai’s property market — a pillar of its economy — has soared in recent years, buoyed by the arrival of international high-net-worth individuals attracted by the glamorous lifestyle on offer in the emirate.
But the outbreak of the Middle East war in late February has dampened growth. Targets in Dubai came under fire in the early days of Iran’s retaliation against US allies in the region.
Even some of its most iconic sites, such as Burj Al-Arab and the Palm Jumeirah, were not spared, dealing a blow to the city whose population is more than 90 per cent foreigners.
Hostilities resumed in July, following an April ceasefire, but Dubai has so far not been in the firing line.
But its image as a city that is “safe no matter what” has yet to recover from the blow it was dealt, said a real estate agent, speaking on condition of anonymity.
‘Grey Area’
Today, she said, “we are in some sort of grey area. I’m getting a split sentiment; people think this has destabilised the region for a long time… And there are people who say this is the right time to invest.”
Clients have not completely disappeared, the agent said, but the margins for negotiation have expanded.
“Since the war, the market’s shifted from a seller’s market to a buyer’s market,” she said.
British real estate consultancy Knight Frank said “we have already noted prices ebbing widely across the city’s mainstream market by between five and 20 per cent, depending on location”, after having surged by an average of 82.9 per cent since 2021.
The market has been hit previously, notably during the 2008 economic crisis and the Covid-19 pandemic.
Property giant Emaar nonetheless announced last month a massive $55 billion project in the heart of Dubai, hoping to attract some 150,000 residents, signalling its confidence in the market’s ability to bounce back.
Binghatti, another major developer, said it had sold two luxury apartments in the centre in June, at $54 million and $19 million respectively.
According to a report by the Betterhomes agency, based on official figures, sales transaction values fell in the second quarter of 2026 by 45 per cent year on year, with the luxury sector hit particularly hard.
But chief executive Richard Waind nonetheless insisted that the situation has improved over the past weeks.
“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 mainly driven by Dubai residents, rather than foreign investors, he said.
But, he explained, this time of year has traditionally been a lull period and projected that investment would begin to “recover and return as we come out of the summer”.