What started as a mission to initiate regime change in Iran and to prevent the country from acquring nuclear weapons, is rapidly causing turmoil in the business world, particularly energy and real estate sectors. On Monday, while oil breaching $115 per barrel grabbed headlines globally causing markets to tumble, the real estate sector in the Middle East has little to bring cheer.
The escalation of the US-Israel-Iran war that started on February 28, soon gripping the entire Middle East, thanks to the flying missiles and drones from Iran, has shaken key cities in the region. Missile interceptions over Dubai and strikes on regional infrastructure—has introduced a period of significant uncertainty for the property market in the United Arab Emirates.
Following the initiation of Operation Epic Fury on February 28, the "safe-haven" narrative that previously attracted billions in the UAE city is being tested by direct security concerns. According to reports from CNBC, the reputation for safety has been shaken by incidents such as a fire near the Burj Al Arab caused by a downed drone and an explosion at Fairmont The Palm. These events have led to a visible pause in decision-making, with Jim Krane of Rice University’s Baker Institute noting that Dubai’s economic model relies heavily on the stability required to attract foreign investment and expatriate residents.
Not losing hope, yet!
Despite the geopolitical backdrop, industry leaders maintain that the real estate market has not seen a structural collapse but rather a sentiment-driven moderation. Indian investors, who currently represent approximately 20% to 22% of all foreign property transactions, are adopting a "wait-and-watch" approach.
Broker Ben Crompton told the Khaleej Times that while transactions already underway are largely progressing, new buyers are more cautious. Analysis suggests that while ultra-prime investors typically maintain a long-term outlook, mid-market buyers are negotiating more aggressively. In some cases, secondary market sellers looking for quick exits have accepted discounts, with Khaleej Times reporting instances of cash-ready investors offering Dh1 million for properties valued at Dh1.3 million to facilitate rapid transactions.
Diversification and capital repatriation trends
The current instability has prompted some wealthy Asian investors, including Indian entrepreneurs, to explore "geographic hedging" by shifting a portion of their liquid assets back to premium Indian markets.
While a mass exodus is not yet evident, CNBC reports that firms like Global Guardian have seen a surge in corporate clients looking to evacuate employees, comparing the atmosphere to the early days of the conflict in Ukraine.
For many Indian nationals, "fresh cheques" are increasingly being redirected toward high-growth corridors in Mumbai, Delhi-NCR,and Bengaluru. This trend is supported by the relative resilience of the Indian domestic market and a desire for capital preservation during periods of Gulf volatility, as noted in reports by Whalesbook.
Institutional resilience and operational continuity
Major UAE developers, including Aldar Properties, have emphasised that operations remain on track despite the regional tensions. Aldar confirmed that its residential communities, schools and development sites continue to operate without interruption, supported by a strong financial position of over Dh30 billion in available liquidity.
To sustain investor confidence, some developers are adjusting payment structures, offering more flexible plans to lower upfront capital requirements. Market participants note that while some international investors from the UK or US have become more cautious, the market remains underpinned by long-term residents who view the UAE as their primary home.
