- Dubai's real estate market cooldown began amid the ongoing Middle East war, impacting growth and shifting market dynamics.
- Residents like Steve are taking advantage of the cooling market, moving to larger apartments that are 15 percent cheaper than their previous residences.
- Sales transaction values in Dubai's real estate market fell by 45 percent year on year in the second quarter of 2026, particularly affecting the luxury sector.
- Prices in Dubai's mainstream market have ebbed by 5 to 20 percent since the war, following an average surge of 82.9 percent since 2021.
- Dubai's property market has been a key pillar of its economy, previously buoyed by high-net-worth individuals attracted to its lifestyle.
- Targets in Dubai faced attacks during the early days of the Middle East war, affecting its image as a safe city.
- Demand for properties is now primarily driven by Dubai residents, rather than foreign investors, according to real estate experts.
As the Middle East war continues, Dubai's real estate market is experiencing a significant shift. The once-booming sector, which had seen prices surge by an average of 82.9 percent since 2021, is now facing a downturn.6
British real estate consultancy Knight Frank reports that prices have dropped by 5-20 percent across the city's mainstream market.
Steve, a resident who moved to Dubai in 2025, shared his experience of moving up the property ladder during this cooldown, stating, "it was really difficult to get a place in this area and the rents had gone up by a lot." Now, he enjoys a larger apartment that is 15 percent cheaper than his previous residence.34
The Betterhomes agency noted a staggering 45 percent year-on-year decline in sales transaction values in the second quarter of 2026, particularly affecting the luxury sector.5
Despite the turmoil, Richard Waind, chief executive of a major developer, expressed optimism, stating, "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."9
The market has transitioned from a seller's to a buyer's market, with many residents now viewing this as an opportune time to invest, despite the ongoing regional instability.
Dubai's property market, a crucial pillar of its economy, is navigating these challenges while aiming for recovery as the summer ends.7
“Sales transaction values dropped 45% year-on-year in Q2 2026, with the luxury sector particularly affected. Meanwhile, property giant Emaar announced a $55 billion project to attract 150,000 residents, and CEO Richard Waind noted demand is starting to recover as summer progresses.”
The Peninsula Qatar
