Dubai Real Estate Faces Pressure as Mid-Segment Buyers Navigate US–Israel–Iran War Uncertainty
The ongoing conflict involving the US, Israel, and Iran is poised to impact Dubai’s real estate market, particularly affecting the mid-segment housing category. Real estate experts indicate that buyers who have already secured homes may attempt to renegotiate terms or seek larger discounts. Meanwhile, potential buyers are expected to adopt a cautious approach, delaying decisions until the geopolitical situation stabilizes. Some investors may also consider reallocating capital towards premium residential projects in India.
Market Dynamics Amid Conflict
Experts suggest that if the conflict persists, the Dubai real estate market could experience a broader decline in transaction volumes, new property launches, investor sentiment, and overall buying appetite. Mid-market buyers are anticipated to negotiate more aggressively in the coming months, while developers may postpone new project launches. High-net-worth individuals (HNIs) might reassess their timing for significant investments, becoming more conservative in their commitments. Prolonged uncertainty could lead to a modest capital shift from Dubai to India in the near term.
Amit Goenka, CMD of Nisus Finance, stated that if the US-Israel-Iran war continues, the Dubai real estate market might see a slowdown in momentum across various metrics, including transaction volumes and investor sentiment. He noted that buyers may adopt a wait-and-watch strategy or negotiate harder for better deals, depending on the conflict’s duration. In February, Nisus Finance announced a ₹247 crore investment in residential apartments in Majan, Dubai.
Anticipated Changes in Buyer Behavior
Following a price growth of 18% last year and 24% the year before, experts believe that such appreciation levels may not be sustainable in the near future. New property launches could be delayed, and HNIs may reconsider the timing of major investments. In the mid-market segment, which includes properties priced between ₹3 crore and ₹8 crore, negotiations are expected to intensify, with end users seeking better deals and investors becoming more cautious about new commitments. High-value transactions are likely to remain subdued as HNIs may defer large purchases.
In the context of broader financial market sell-offs, there may be a temporary shift towards safer investments, with commodities like gold and silver gaining traction. Meanwhile, both equities and real estate are under pressure.
Resilience of Dubai’s Real Estate Market
Despite the current uncertainties, some experts believe that Dubai has historically shown resilience, quickly rebounding from disruptions such as the COVID-19 pandemic and the 2008 financial crisis. Rizwan Sajan, founder and chairman of Danube Group, emphasized that the impact on the real estate market appears to be more sentiment-driven than indicative of any fundamental structural shift. He expressed confidence in a steady and sustainable growth trajectory moving forward.
Dubai’s attractiveness as a property investment destination is bolstered by its tax-friendly regime, residency-linked investment framework, and appealing rental yields of approximately 6% to 8%. Property prices have surged by 20% to 40% over the past two years, fueled by strong global demand.
Indian nationals represent roughly 20% to 22% of foreign property purchases in Dubai, making them the largest investor group in the market. Factors contributing to this trend include geographical proximity, the stability of the UAE dirham pegged to the US dollar, and relatively attractive rental yields, which typically range from 6% to 9%.
Geopolitical Uncertainty and Buyer Sentiment
During periods of geopolitical uncertainty, property markets often enter a phase of caution. Buyers tend to adopt a wait-and-watch approach, postponing deal closures until greater clarity emerges. If tensions persist, some investors may delay purchases or negotiate more aggressively. In the short term, demand could moderate as decisions are deferred, and rental yields may also face pressure.
The future trajectory of the market will largely depend on the duration of the crisis. A prolonged situation could lead to a sentiment-driven pause, slower transaction volumes, price corrections, and stronger buyer-side negotiations before stability returns.
Pyush Lohia, Managing Director of Lohia Worldspace, noted that the current situation in the Middle East is making real estate investors more cautious, particularly in markets like Dubai, which have long been regarded as safe and stable for investment. While panic selling is not evident at this stage, a clear wait-and-watch approach is apparent among buyers. This could slightly slow down sales activity as investors reassess risks and timelines, especially with a significant number of new units expected to enter the market this year.
Potential Capital Shift from Dubai to India
Morgan Owen, Managing Director for the Middle East and North Africa at ANAROCK Group, indicated that investment redirection is a possibility. Indians and other non-resident Indians (NRIs) constitute one of Dubai’s largest buyer groups, accounting for about 10% of sales in 2025. They are attracted by high returns and low taxes.
If risk perception continues to rise, a small but notable capital shift from Dubai to India could occur. However, Owen added that Dubai’s structural appeal is likely to prevent abrupt reallocations. Gaurav Gupta of Zeno Realty suggested that the current uncertainty may prompt a small fraction of Indian HNIs to reevaluate their allocations, including investments in premium Indian markets like Gurugram.
Experts agree that a large-scale capital shift to other countries is unlikely, as few cities offer the same combination of affordable luxury, lifestyle appeal, and global connectivity as Dubai. The prospect of investors liquidating assets in Dubai to redeploy capital into India appears remote. Real estate experts have indicated that currency depreciation and potential tax implications for NRIs may encourage many to retain or reinvest their funds overseas.
Some analysts believe that NRI investments in Indian real estate, particularly in the luxury segment, could also experience a temporary slowdown amid the current geopolitical tensions. Gulf-based NRIs may delay luxury home investments until the situation stabilizes, rather than committing to high-value property purchases in India.
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Published on 2026-03-06 06:49:00 • By FAME Delivered News Desk