Why Dubai Property Is Holding Up: Transaction Values Fall but Prices Stay Firm

Dubai property under pressure — but not collapsing

Three months into the Iran war, the Dubai property market has stopped being a one-note story. The real estate UAE market has seen a sharp fall in transaction volumes, yet prices have proved more resistant than many feared. That split — fewer deals but largely steady prices — tells us more about buyer behaviour and market structure than any single headline.

The opening line is stark: residential transactions in May were valued at 22.5 billion dirhams, roughly half the 46.6 billion dirhams recorded in February before the conflict escalated, according to data compiled by Reidin from the Dubai Land Department. But while volumes fell, values for completed homes are steady and off-plan price moves are measured. Our analysis finds a market that is adjusting rather than breaking.

Snapshot: the hard numbers you need to know

Understanding what has changed requires separating transaction activity from price movements. Key facts from the most recent data:

• Total residential sales in May: 22.5 billion dirhams (down 42% from April and about 50% from February).
• Off-plan sales in May: 15.8 billion dirhams, a near 50% drop month-on-month; off-plan accounts for about 75% of transactions.
• Price fall for properties under construction this year: less than 9%.
• **Completed homes: transaction values down less than 15% from April, with average prices around 1,730 dirhams per square foot — little changed since year-end, per Reidin.
• A high-profile prime sale: Sotheby’s sold a beachfront plot for more than US$100 million in May.
• Developer payment resilience: Omniyat reports more than 85% of buyers paid on time.

Those figures show the disconnect: transaction values are down sharply, driven most by off-plan deals, while price levels for completed stock remain firm.

Off-plan slump vs secondary market steadiness

The biggest swings are in off-plan, the segment where buyers commit today for delivery years ahead. Sales there plunged almost 50% in May compared with April. There are several reasons.

• Buyers sitting on the sidelines: regional instability makes long-term commitments harder to justify. Off-plan purchases require confidence in delivery timelines and in the wider political climate.
• Seasonal distortion: part of the May fall reflects a week-long Eid holiday, which pushed deals out of the month.
• Developers are pacing launches: several large builders have slowed new project launches and are focusing on selling existing stock.

Yet the price fall for off-plan stock is less than the fall in transaction volume. That suggests the slowdown is about fewer buyers rather than a broad collapse in prices. Sellers and developers are resisting sharp discounts, at least for reputable names.

The secondary market for completed homes shows early signs of stabilisation. Transaction values fell less than 15% from April, while average prices per square foot remained roughly 1,730 dirhams. That level of price resilience is meaningful. Completed homes attract owner-occupiers and long-term investors who value tax efficiency, rental yields and residency options.

Who is buying now — the shifting buyer profile

The buyer base in Dubai was diverse before the crisis and it remains so, but its composition is changing. Historically, buyers from India, the UK and Russia were major forces behind the five-year surge in prices that lifted values by nearly 70%. Today we see a shift:

• Indian buyers have become more selective, trading aggressive purchasing for careful, targeted investments, according to Anuj Kejriwal of Anarock.
• Middle Eastern buyer presence has increased, with more visibility of buyers from Lebanon and Egypt.
• High-net-worth investors remain active in prime assets: capital flows continued into waterfront and ultra-prime deals.

This change matters. A more diversified investor base means price support is less reliant on any single nationality. It also means what sells quickly today are well-located, limited-supply assets rather than mass-market off-plan units.

Why prices are holding up: fundamentals that matter

I am cautious about declaring any real estate market immune to shocks. Still, several structural factors are cushioning Dubai:

• Low taxes and a transparent regulatory framework continue to attract foreign capital.
• Residency reforms like the long-term “golden visas” encourage expatriates to buy homes as places to live, not simply speculative assets.
• Lending rules now force higher upfront equity: foreign buyers must put down at least 20% on off-plan purchases, which reduces speculative flipping.
• Banks are reporting stable non-performing loan levels and no major rise in defaults, which keeps financing available.

Those are practical advantages for investors who value predictability. Developers and lenders have both learned from the 2009 crash when prices fell more than 50%. The system today has higher buffers and less leverage.

Developer strategies and market reactions

Developers are reacting in mixed ways. Large, reputable players are slowing new launches and selling from completed inventories. Mohamed Alabbar of Emaar has said the company is not launching new projects and is focused on existing stock without cutting prices. Smaller developers, however, are offering discounts to stimulate sales.

What that means for buyers and investors:

• If you prioritise certainty, completed homes by reputable developers are a safer bet.
• If you want higher upside and can tolerate delivery risk, selected off-plan projects from established developers still have appeal — but expect more careful due diligence and delayed purchases.

Banks and developers both appear determined to avoid the leverage excesses that fuelled the 2009 correction. That reduces tail risk for buyers, but it also curbs the kinds of rapid price recovery investors saw in prior cycles.

Risk checklist for buyers and investors

We have a clear set of practical considerations. If you are considering a purchase in Dubai now, ask these questions:

• Is the project delivered or off-plan? Off-plan requires a longer horizon and greater tolerance for political risk.
• Who is the developer? Reputable developers are less likely to delay projects or force price cuts.
• What are the payment terms? Check the schedule for milestones and penalties.
• How liquid is the asset?