Dubai Home Sales Drop Sharply in Third Quarter Amid Regional Uncertainty

The volume and value of residential property transactions in Dubai experienced a sharp decline in the third quarter of this year, as buyers adopted a more cautious approach due to regional uncertainty surrounding the Iran war, according to a recent report. During the three months leading up to the end of September, Dubai recorded home sales totaling Dh72.6 billion ($19.7 billion), marking a 47 percent decrease compared to the same period in the previous year.

Property consultants Cavendish Maxwell reported that the number of transactions dropped by 38 percent to 34,000. This figure reflects the impact of reduced market activity as the lag in property sales registrations begins to clear. Ronan Arthur, director and head of residential valuation at Cavendish Maxwell, noted that the third-quarter data captures a combination of recent and earlier buying activities, accounting for the time gap between a purchase agreement and its formal registration.

Purchasing activity became notably more measured, with buyers exercising caution in the weeks and months following the onset of the conflict. Despite this shift, the off-plan sector maintained its dominance in residential sales throughout the quarter, comprising 65 percent of the total sales value and 72 percent of overall property purchases.

Dubai's property market has experienced a significant boom in recent years, largely driven by government initiatives such as residency permits for retired and remote workers, the expansion of the 10-year golden visa program, and broader economic growth fueled by the UAE’s diversification efforts. However, the market began to cool as regional tensions escalated due to the Iran war that started in late February. The conflict has also impacted the hospitality, tourism, and aviation sectors following military exchanges involving the US, Israel, and Iran, alongside retaliatory strikes on energy sites and civilian infrastructure across the Gulf region and Iraq.

While the fundamental drivers of Dubai real estate demand remain intact, near-term activity will continue to be influenced by factors such as the frequency and volume of new launches, ongoing regional uncertainty, and a broader normalization in buyer behavior, according to Mr. Arthur. Data from Cavendish Maxwell shows that residential sales transactions declined overall for the first nine months of the year, with total volumes down 23 percent year-on-year to 112,580 and total values falling 27 percent to Dh292 billion.

A separate report by S&P Global Ratings also highlighted a significant reduction in Dubai's residential property transactions resulting from the war. Citing data from the Dubai Land Department, the rating agency stated that total real estate sale transactions averaged 12,644 per month between March and September 2026, representing a 26 percent decline from the 17,198 monthly average recorded in January and February 2026. Industry reports cited by the agency also indicated a price decline of 5 percent to 15 percent between the end of 2025 and September 2026.

S&P Global Ratings anticipates a gradual price correction in Dubai’s property market. Over the medium term, the agency expects the UAE and Dubai governments to sustain the emirate's appeal through ongoing reforms and large-scale infrastructure projects, leading to a measured price correction rather than a rapid decline in the residential real estate sector. Additionally, the agency projects that secondary-market transactions will become more prevalent as falling prices prompt investors to sell properties, with the most pronounced impact expected on investor sentiment and demand within the luxury and ultra-luxury segments.

Mohamed Alabbar, founder of Emaar Properties, also acknowledged a projected adjustment of 5 percent to 10 percent in the broader Dubai real estate sector as a result of the war. Speaking at the AIM Congress in Dubai last month, he noted that should the situation stabilize, market activity could rapidly rebound and accelerate once again.