The volume and value of residential property transactions in Dubai fell sharply in the third quarter of this year as buyers became “more cautious” amid regional uncertainty over the Iran war, according to a new report.
Dubai recorded home sales worth a total of Dh72.6 billion ($19.7 billion) in the three months to the end of September, down 47 per cent compared to the same period last year. The number of transactions dropped 38 per cent to 34,000, which reflected “the impact of reduced activity as the lag in property sales registrations begins to clear”, the report by property consultants Cavendish Maxwell said.
“The Q3 2026 data captures a mix of recent and earlier buying activity, reflecting the time between a purchase being agreed and formally registered as a sale,” Ronan Arthur, director and head of residential valuation at Cavendish Maxwell, said.
“Purchasing activity became more measured, with buyers being more cautious in the weeks and months following the start of the conflict.”
The off-plan sector continued to dominate residential sales during the quarter, accounting for 65 per cent of total sales values and 72 per cent of property purchases.
Dubai's property market has boomed in recent years, benefiting from government initiatives such as residency permits for retired and remote workers, expansion of the 10-year golden visa programme and overall growth in the UAE’s economy on diversification efforts.
However, the market started to cool during regional tensions triggered by the Iran war that began in late February. The war also affected hospitality, tourism and aviation as the US and Israel attacked Iran, and Tehran retaliated by striking energy sites and civilian infrastructure across the Gulf region and Iraq.
“While the fundamentals driving Dubai real estate demand remain, near-term activity will continue to be shaped by a number of factors, including the frequency and number of launches, regional uncertainty and a broader normalisation in buyer activity,” Mr Arthur added.
Residential sales transactions fell for the first nine months of the year, Cavendish Maxwell data showed, with total volumes down 23 per cent on annual basis to 112,580 and values declining 27 per cent to Dh292 billion.
A report by S&P Global Ratings also found a significant drop in Dubai's residential property transactions as a result of the war.
Citing Dubai Land department data, the ratings agency said total real estate sale transactions averaged 12,644 per month between March and September 2026, a drop of 26 per cent from 17,198 in January and February 2026. It also said prices declined by 5 per cent to 15 per cent between the end of 2025 and September 2026, quoting industry reports.
Price correction
S&P Global Ratings expects a “gradual” price correction in Dubai’s property market. “Over the medium term, we anticipate that the UAE and Dubai governments will remain focused on developing the emirate's attractiveness through reforms and large-scale infrastructure projects. That is why, for the residential real estate market, we expect a gradual price correction rather than a rapid price decline,” it said.
The ratings agency expects secondary-market transactions to become more prevalent as price declines prompt investors to offload their properties. The greatest impact could be on investor sentiment and demand within the luxury and ultra-luxury segments, it added.
Emaar Properties founder Mohamed Alabbar also indicated an “adjustment of 5 per cent to 10 per cent” in Dubai’s broader real estate sector because of the war.
“But then again, you know, if the situation settles, God knows what could happen in this market. It could become pretty fast [paced],” he said last month at AIM Congress in Dubai.
