The ongoing conflict in Iran has prompted UAE banks to adopt a more cautious approach to mortgage lending, which is likely to have significant implications for the real estate market in Dubai. As financial institutions become increasingly selective, both buyers and sellers are left navigating a more complex landscape.

Increased Caution Among Banks

Recent reports suggest that banks such as HSBC and Standard Chartered are tightening their mortgage lending conditions, particularly for UAE residents. Previously, home loans constituted a substantial portion—around 25%—of real estate sales by value in Dubai. However, sources indicate that these institutions are now focusing on a limited number of applications, specifically excluding non-resident requests. A Dubai mortgage broker noted that while banks are being choosy, it remains business as usual for those eligible.

The timeframe for mortgage sales typically ranges from four to six weeks from approval to system entry. Thus, it will take time to grasp the full impact of the ongoing conflict on lending practices and market dynamics. Recent data indicates a staggering 52% decrease in mortgage sales volumes in just one week, according to figures from the Dubai Land Department (DLD). Comparatively, cash sales dipped by 19% in the same timeframe, signaling a general downturn in market confidence.

Steady House Prices Amid Volatility

Despite increasing caution from lenders, house prices have not yet seen significant declines. Real estate consultancy Cavendish Maxwell, often engaged by banks for property valuations, reported that current market conditions haven’t translated into noticeable shifts in pricing. Zacky Sajjad, a director at the consultancy, highlighted that even though some banks are adopting a more conservative approach, this trend has yet to be reflected in valuation evidence or changing transaction prices.

However, data from DLD indicates fluctuations in the market, with sales volumes in Dubai decreasing by 25% and property prices slipping by 6% between mid-February and mid-March. These statistics underline a growing reluctance among buyers to enter the market amid uncertainty.

Future Trends in Off-Plan Sales

Industry predictions indicate that off-plan sales are expected to face more significant challenges than transactions in the secondary market. A report from S&P Global suggested that while the luxury and ultra-luxury segments might be particularly affected, secondary market sales—with the backing of mortgages—are likely to see a rise as prices decline. Investors may seek to offload their properties, and this trend could result in increased liquidity within the marketplace.

Total residential and commercial sales reached a staggering AED 687 billion (approximately $187 billion) last year, according to DLD estimates. Even though mortgage sales totaled AED 179 billion in 2025—a decline of 4% year-on-year—the number of transactions increased by 23%, reaching roughly 51,000 deals. This suggests a nuanced market where demand persists, albeit under varying conditions.

In summary, as UAE banks tighten their lending criteria in light of regional conflicts, both homebuyers and investors must adapt to new realities. While current house prices remain stable, the evolution of market trends may soon shift, particularly in the off-plan segment. Stakeholders in the real estate sector must remain vigilant as they navigate this complex landscape.