Property sales in Dubai have experienced a sharp decline following the outbreak of conflict in the Middle East, marking one of the most significant downturns in the city’s real estate market since the COVID-19 pandemic. According to research from ValuStrat, a Dubai-based consultancy, transactions fell 19% in May compared to April, accelerating from a 4% drop the previous month. Overall, sales are now below half the volume recorded during the same period last year.

Haider Tuaima, head of real estate research at ValuStrat, noted that this scale of annual decline is unprecedented in recent years, highlighting the market’s vulnerability to geopolitical tensions. Supporting these findings, Dubai-based firm Reidin reported that property sales in May amounted to 22.5 billion dirhams (£4.6 billion), representing a 42% drop from April and roughly half the value recorded before the conflict began in late February.

Dubai, known for its flourishing property sector fueled by a surge of high-net-worth individuals benefiting from the city’s zero income tax regime, has been impacted by the war in the Middle East that erupted in February. An Iranian missile strike on a luxury hotel in the Palm Jumeirah area underscored the region’s instability and increased cautiousness among buyers and sellers alike.

Industry sources indicate sellers of luxury villas and apartments have significantly lowered asking prices, with discounts ranging between 20% and 25% compared to pre-conflict valuations. Yasin Valimulla, a Dubai-based buying agent specialising in properties valued above $10 million (£7.5 million), reported that many wealthy investors who had previously purchased in the city have since exited the market. “There was a lot of panic in March and there is still not much clarity to this day,” he commented. Valimulla added that buyers from Western Europe are adopting a wait-and-see approach, potentially delaying purchases by one to two years depending on how the geopolitical situation evolves.

This downturn marks a sharp correction for Dubai’s high-end real estate market, which had been the world’s busiest for luxury property transactions at the end of 2025. Data from Knight Frank showed that the city led global sales of homes priced between $2.5 million and $10 million, outpacing established markets such as London, New York, and Los Angeles.

While Valimulla describes the current adjustment as a market correction following unsustainable highs over the past two years, the ultimate trajectory remains uncertain. Much depends on whether diplomatic efforts between the US and Iran result in a durable peace agreement and how quickly international confidence in the region can be restored.