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Dubai’s yearslong property boom was always expected to deflate eventually. Iranian strikes on the city now appear to be puncturing the cycle, putting pressure on residential and commercial property prices — and on the people whose jobs depend on them.
Last year, more than 270,000 properties worth 917 billion dirhams ($250 billion) traded hands in a city with a population of 4 million people, according to Dubai Land Department data. The momentum continued in the early part of 2026, until Feb. 28, when Tehran retaliated against Gulf countries after the US and Israel launched strikes on Iran.
Sales volumes dropped almost 30% in March compared to the previous month, according to business news site AGBI. Prices are holding, possibly because agreements were struck before the war, but new deals will likely see discounts, with buyers seeking cuts of up to 30%.
With few tourists, remote work, and uncertainty affecting consumer spending, commercial real estate is also struggling, with hospitality taking the biggest hit. Hotel occupancy in Dubai for the week ending March 14 sank to 16%, down from the usual 90%. Hotels have responded with deep discounts: Some luxury properties on Palm Jumeirah have cut prices by as much as half.
“In the near term, we expect to see hotels pivoting their focus to domestic travellers and staycations, mirroring the strategies adopted during the pandemic,” Faisal Durrani, head of research at property consultants Knight Frank MENA, told Semafor.
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The tourism collapse is leading to layoffs. Julieta Sbert, a Four Seasons employee who moved to Dubai last year, said she watched her team shrink within weeks of the first strikes. “One day, the hotel is full, the next you’re being told your shift isn’t needed,” she said. “No one knows how long this lasts.”
A Dubai restaurant owner who declined to be named said his restaurant went from having queues on weeknights to “sending staff home early just to manage costs.”
Layoffs feed into the residential property market: Dubai’s rental demand is underpinned by the city’s large expatriate workforce. “Given the residential market’s historical sensitivity to investor sentiment and inward migration flows, shifts in confidence levels because of ongoing events will be a critical determinant of price stability in the short term,” Durrani added.
Ratings agencies and analysts say the market’s long-term outlook depends on the scale and length of the conflict, and the nature of any peace deal, all of which remain unknown variables. However, many experts say Dubai’s image as a haven will be in doubt the longer the war drags on. The UAE’s government plans to announce a support package for the tourism sector soon.
Notable
- Some Dubai real estate bonds flashed distress signals last month, with risk premiums rising sharply weeks into the war, Bloomberg reported.
Correction
An earlier version of this story misstated Dubai’s hotel occupancy rate in March in the fourth paragraph.