Where have you parked your recent bonuses? If your answer is oil barrels, well done. However, if you put your funds into real estate in Dubai, you’re not alone, and you may want to reevaluate your investment strategy.

The Real Estate Dilemma in Dubai

In conversations among senior traders based in Dubai and London, a wave of discontent is evident. Many have poured previous bonuses into off-plan properties in Dubai, only to face the grim reality of declining housing prices. “It’s troubling,” remarks a trader from Goldman Sachs who prefers to remain anonymous. “People are genuinely stressed,” agrees a senior rates trader from London. The trend of investing in multiple off-plan units has left many in difficult situations, as their assets may become nearly impossible to sell.

Off-plan property investment has been a significant component of Dubai’s real estate market for over a decade. Just before regional conflicts escalated, off-plan purchases accounted for 60% of property sales in the emirate. An entire industry flourished around this model, which involves paying upfront before construction milestones and upon project completion. Despite the shifting geopolitical landscape, many traders are still obligated to fulfill these commitments. “Developers are strict about contract clauses; any delay in payment is unacceptable,” a trader notes.

The Impact of War on Property Values

The ongoing war has left many wondering about the future of Dubai’s real estate market. Some forecasts suggest a decline in property values exceeding 30%, while others estimate a drop of around 20%. Regardless, this marks a dramatic shift from 2025, when real estate transactions spiked by 20% due to assumptions of continuously rising prices. According to Knight Frank, Dubai attracted the highest number of property purchases by high-net-worth individuals last year, with buyers primarily from India, the UK, Saudi Arabia, and Singapore.

One trader who moved to Dubai highlights an element of greed among newcomers to the market. “The surge in prices post-COVID made people act recklessly,” he states. “Some bought entire floors, leveraging their investments heavily. If they default on their initial payments, they’ll face serious consequences, perhaps losing their deposits.”

Market Resilience and Future Prospects

Dubai has weathered property market crashes before. Between 2021 and 2025, property prices soared by 70%, only to plummet by 50% in the aftermath of the 2008 financial crisis. Since then, local authorities have enacted measures to ensure adequate funding for projects. “At least the properties will be finished this time,” says the trader, hinting at lessons learned from the past.

Despite the market conditions, some finance professionals still see potential in Dubai’s property market. “I haven’t made a purchase yet, but I’m keeping an eye out,” states a hedge fund manager interested in premium locales such as Emirates Hills or Palm Jumeirah. He’s hopeful for opportunities that offer a 10-15% discount, but acknowledges that this may not be adequate if geopolitical tensions persist.

Questions remain regarding Dubai’s allure as a tax-free haven providing a safe lifestyle. “Is it still viable to think of Dubai as a secure paradise, especially with regional tensions so close?” ponders one trader. “People are starting to doubt its safety when Iran is just 40 miles away.”

The future of the real estate market depends heavily on the duration of the ongoing conflict. While many expats from various backgrounds demonstrate resilience, continuous instability may prompt affluent residents to reevaluate their commitments. If these wealthy individuals leave, the 30%+ losses on off-plan properties could become a reality. Nevertheless, some traders maintain optimism about Dubai’s long-term prospects, believing it’s not yet time to write off the market completely.