Real estate in Dubai could fall 50 to 70%: war with Iran turns dream city into risk zone

For years, Dubai was considered a paradise for real estate investors. Rich Russians, Asian investors and European entrepreneurs bought apartments, villas and penthouses en masse. Prices seemed like they could only rise, but the war with Iran shattered that illusion in just a few weeks.

Prices have already fallen 20%, further fall threatens

Dubai’s real estate index has already fallen by 20% since the start of the conflict, wiping out all price increases from 2025. And, it could get a lot worse. If the conflict in the Middle East continues for a longer period of time, real estate prices could fall by 50% by the summer of 2026. If the war continues for longer, a fall of 60 to 70% cannot be ruled out.

Potential buyers understandably do not want to invest in assets that could fall another 30 to 50% in the coming months. The result: the market dries up.

Investors are fleeing Dubai en masse

Dubai has emptied in recent weeks. Investors from East Asia have shifted their capital to Singapore and Hong Kong. Europeans and Russians seek refuge in Turkey, Thailand and Cyprus.

The exodus goes beyond just big investors. The entire luxury economy that Dubai relied on, from high-end catering to exclusive services, is seeing demand collapse. Investors who still own real estate are now trying to sell it at a discount. Geopolitical tensions, missile threats and the closure of the Strait of Hormuz have turned Dubai into a risk zone.

The illusion of stability is over

The biggest problem for Dubai is that it is a structural problem. The geographical location near Iran and Saudi Arabia, which was not an issue for years, has now become a vulnerability. Investors realize that a city a few hundred kilometers from an active war zone is not a safe haven for their assets.

Even if the war ends soon, Dubai is unlikely to return to previous price levels. Trust has been damaged. Investors who once move their money to Singapore or Hong Kong do not simply return. The illusion that Dubai was untouchable has been shattered, and that kind of trust cannot be restored with a ceasefire.