Dubai homebuyers feel the pinch as war slows sales

For the families and individual buyers who make up Dubai’s residential market, the past seven months of war in the Middle East have brought a visible slowdown. Transaction volumes have dropped significantly, and in specific segments prices are now undergoing a correction, albeit a moderate one. That is the picture drawn by S&P Global Ratings, which published a Credit FAQ today examining how the conflict could reshape the emirate’s housing market through 2027.

The report, titled “How Will The Middle East War Reshape Dubai’s Residential Property Market in 2027?”, looks closely at what the disruption means for the people who live in and invest in the city’s homes. It addresses the impact of the conflict on residential property prices, on the credit ratings of developers, on liquidity and funding, and on banks’ exposure should a broader market correction take hold.

One reason the price declines have stayed moderate, S&P notes, lies in how the market itself has changed over the past several years. The UAE’s visa reforms have supported a higher proportion of long-term investors and end users, people who buy homes to live in them or hold them over time rather than trade them quickly. That shift in market dynamics has helped cushion prices even as war disrupted the region.

“Our base case is that the Middle East disruptions will continue into 2027. This, together with new deliveries due in 2027-2028, could accelerate the price correction, particularly in investor-driven apartment segments,” explained Sapna Jagtiani, a credit analyst at S&P Global Ratings.

For buyers in those investor-driven apartment segments, the warning is the most pointed part of the analysis. If the correction does accelerate, it would land hardest where ownership is driven by investors rather than residents. S&P also sets out what it expects from rated Dubai developers in terms of capital expenditure and dividend payments, and considers how payment delinquencies and construction delays could affect developers’ funding sources and liquidity positions. Those outcomes would shape not only company balance sheets but the pace at which new homes actually reach the people waiting for them.

The report also turns to Dubai’s banks, examining the risks they would face if the correction in real estate prices speeds up. Bank exposure matters for ordinary borrowers and depositors alike, since a weakening property market can tighten credit conditions across the economy.

There is, however, a more reassuring scenario. “However, if geopolitical risk subsides in 2027, Dubai’s supportive fundamentals and regulatory framework mean that we could expect a stabilization of residential real estate prices despite the additional supply,” Jagtiani stated. In that case, the city’s underlying strengths and its regulatory framework would allow prices to hold steady even as new supply arrives in 2027-2028.

The analysis also examines why Dubai residential property prices have declined only moderately in the seven months since the war began, and outlines S&P’s expectations for the market in 2027. A fuller account of the assessment is available via the reference source at https://www.tradingview.com/news/reuters.com,2026-10-08:newsml_Zaw70l2yc:0-zawya-s-p-assesses-impact-of-middle-east-war-on-dubai-property-market/

For now, the picture S&P paints is one of a market under strain but not in freefall. Transaction volumes have fallen sharply, yet the people who own homes in Dubai, whether as residents or as long-term holders, have so far seen only moderate price declines. The next test will come in 2027, when the war’s trajectory and a wave of new home deliveries intersect. If geopolitical risk eases, the market may stabilize; if it does not, the correction now visible in certain apartment segments could deepen, with consequences for developers, banks, and the households and investors who depend on both.