Dubai Real Estate Stocks Plunge 20% In Five Days As US-Israel-Iran War Erodes Investor Confidence

New Delhi: Dubai’s real estate stocks have seen a sharp sell-off after tensions in West Asia escalated following the war involving the United States, Israel and Iran, wiping out all the gains made by the sector this year. The DFM Real Estate Index has fallen about 20 per cent in the past five trading sessions as investors turned cautious amid the widening conflict in the region. The sharp drop has erased the gains the index had made in 2025. The index had touched a peak of 16,910.3 on February 27, just before geopolitical tensions in West Asia intensified.

Earlier this year, the index had risen around 15 per cent, continuing a strong rally seen in previous years. It had surged 63 per cent in 2024 and 38 per cent in 2023 -- reflecting strong investor interest in Dubai’s property market. The sell-off comes after a record-breaking year for the emirate’s real estate sector. According to property consultancy Anarock, real estate transactions in Dubai reached nearly AED 917 billion, or about $250 billion, in 2025. This was the highest level recorded in the city’s history. During the year, total transaction volumes crossed 270,000 deals.

Dubai’s housing market has seen rapid growth since the pandemic. Property prices in the city have risen around 60 to 75 per cent since 2021, making it one of the strongest-performing property markets globally in the post-pandemic period. Foreign investors have played a major role in this boom. Indian buyers have emerged as the largest overseas investor group in the Dubai property market, accounting for around 20 to 22 per cent of all foreign property purchases.

Rental returns in the city have also remained attractive. Prime residential properties in Dubai typically offer annual rental yields between 6 and 9 per cent, among the highest in major global property markets. These returns continue to attract both long-term investors and buyers looking to preserve wealth, particularly from India.

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