Dubai’s property market recorded its steepest monthly contraction since the pandemic in May, with sales plummeting 19% in a single month, according to ValuStrat, a Dubai-based research consultancy. The drop accelerated sharply from April’s 4% decline, said Haider Tuaima, head of real estate research at ValuStrat, signaling that the ready homes sector is under sustained and worsening pressure.
Transaction volumes tell an equally stark story. A separate analysis by Reidin found that property worth 22.5 billion dirhams (approximately 6.1 billion US dollars) changed hands in May, a 42% decline from April and roughly half the 46.6 billion dirhams recorded in the month before the Middle East conflict began. Volumes have now fallen to less than half their year-ago levels.
The deterioration traces directly to the outbreak of war in late February. An Iranian missile strike on a five-star hotel in Dubai’s Palm Jumeirah area in March sent shockwaves through the sector, triggering a rapid reassessment of the city’s appeal among international buyers. Confidence, once a given in this market, evaporated fast.
Sellers have responded by cutting asking prices hard. Yasin Valimulla, a buying agent specializing in properties valued at 10 million dollars or more, reported that the limited sales still occurring are transacting at discounts of 20% to 25% below pre-conflict valuations. The departure of wealthy residents has been particularly pronounced. “We have sold to super-high-net-worth guys in the last year and a half, every single one of them has now left Dubai,” Valimulla said.
Western European buyers, previously significant participants in Dubai’s luxury segment, have pulled back. “There was a lot of panic in March and there is still not much clarity to this day,” Valimulla explained. “Western European buyers are now more reluctant to buy properties here. I think they want to wait out maybe a year, even two years. It depends on how things play out.”
By contrast, the market these buyers are retreating from had only recently been the world’s most active. Knight Frank found that Dubai led global sales of homes priced between 2.5 million and 10 million dollars at the end of 2025, surpassing London, New York, Los Angeles, and Hong Kong. In the 10 million dollar-plus segment, Dubai recorded 9,050 sales against 6,577 in New York and 3,089 in London.
Some market participants see the pullback as a correction that was coming regardless. “The numbers were so high to begin with, especially in the last two years. The market at that level was not sustainable anyway,” Valimulla said. “There is going to be a correction in pricing, we just do not know the impact of that correction until we have geopolitical clarity.”
The operational consequences extend well beyond price adjustments. Richard Waind of Cencorp, a real estate group, warned that smaller brokerage firms now face closure. “The war has been a black swan event that was huge and swift,” he said. “The slowdown in sales is putting pressure on those smaller agencies that set up in a frothy market. There were about 1,000 brokers in the market a decade ago, now it’s about 10,000. That is going to fall.”
High-net-worth individuals are exploring alternatives. Milan, London, and Singapore have emerged as preferred destinations as the super-wealthy reassess where they want to be based. Whether Dubai recovers its position, and how quickly, depends on whether any peace agreement between the US and Iran holds and when, or if, geopolitical stability returns to the region.