Regional conflict has introduced a degree of investor caution into Dubai’s real estate market, but structural strengths including record transaction volumes, a diverse buyer base and strong rental yields suggest the long-term outlook remains intact, according to ANAROCK Group.
Dr Prashant Thakur, Executive Director and Head of Research and Advisory at ANAROCK Group, says that while the escalation of tensions involving Iran and parts of the Gulf has placed Dubai’s property market under scrutiny, the emirate enters this period from a position of considerable strength. In 2025, Dubai recorded nearly AED 917 billion (approximately USD 250 billion) in real estate transactions, the highest in its history, with transaction volumes crossing 270,000 deals.
Residential property prices have risen by roughly 60 to 75 per cent since 2021, and rental yields across the market typically range between 6 and 9 per cent. Indian nationals remain the largest foreign investor group, accounting for 20 to 22 per cent of all foreign property purchases, with Indian-origin developers now estimated to represent around 8 to 10 per cent of the development pipeline.
Thakur notes that geopolitical shocks in a market with strong momentum tend to slow transaction activity rather than trigger immediate price corrections. Off-plan and speculative segments are typically the first to feel a sentiment shift. Tourism exposure also presents a risk, with industry estimates suggesting regional instability could reduce visitor numbers by 23 to 38 million and cut tourism revenues by USD 34 to 56 billion.
Historical cycles offer some perspective. Dubai’s market declined by 50 to 60 per cent during the 2008 global financial crisis and took six to seven years to recover. The COVID-19 disruption, by contrast, was brief, with the market recovering within 12 to 18 months.
“The real question may not be whether geopolitical tensions will affect Dubai’s property market. The more relevant question is how quickly investor confidence returns once the geopolitical environment stabilises. If history is any guide, Dubai’s real estate market has repeatedly demonstrated that it can recover faster than many global property markets,” said Dr Thakur.
