![\"Image](\"https:\/\/img.etimg.com\/photo\/msid-130461471,imgsize-146774\/FILEPHOTO_GeneralviewofDubaiDowntownshowingworld'stallestbuildingBurjAlKhalifa%2CinDubai..jpg\")
<\/p>\nForeign investors and well-heeled expatriates helped transform Dubai\u2019s housing market into one of the world\u2019s hottest. Now values are falling for the first time since the global pandemic as the regional conflict weighs on demand.<\/p>\n
A home price index compiled by ValuStrat fell 5.9% in March from a month earlier, with valuations seeing their first decline since 2020, according to the Dubai-based property consulting and valuation company that\u2019s used by some of the country\u2019s large banks. Even with that drop, the gauge is only back to where it was six months ago.<\/p>\n
Dubai\u2019s Land Department didn\u2019t respond to requests for comment.<\/p>\n
The data are an indication of the conflict\u2019s immediate impact on real estate in Dubai, which is part of the United Arab Emirates. The city has relied on its status as a tax-free haven to draw expatriates and foreign capital to its property market \u2014 an influx that helped home prices rebound from a prolonged slump and soar more than 70% since 2020.<\/p>\n
That rally is now being tested by geopolitical upheaval. Gulf Arab nations bore the brunt of Iran\u2019s retaliation for the US and Israel\u2019s attacks that began in late February. They faced thousands of missiles and drones over several weeks, intercepting the vast majority. A fragile ceasefire began earlier this month, but planned peace talks fell apart this week.<\/p>\n
The value of Dubai residential sales dropped by nearly a fifth to 37.2 billion dirhams ($10.1 billion) in March from the previous month, according to REIDIN, a research and analytics firm that analyzes data from the Dubai Land Department. The number of transactions dropped to about 13,000 from nearly 16,000 over that period.<\/p>\n
\u201cThe market is not going to immediately return to what it was before and we think there\u2019s going to be a softening of pricing,\u201d said Louis Harding, the chief executive officer of Dubai brokerage Betterhomes. \u201cWe expect demand to be impacted because there\u2019s a chance that population will not grow at the same pace of recent years, at a time of significant hand over numbers.\u201d<\/p>\n
Betterhomes and ValuStrat said the drop in March may have been exacerbated by factors like the Eid Al-Fitr holiday and some of the UAE\u2019s heaviest rainfall in decades. Still, Harding is preparing for a \u201clean and challenging\u201d summer for transactions.<\/p>\n
In recent years, Dubai has made an effort to transform itself into a less transient destination. A push to award long-term golden visas has resulted in an influx of foreigners that have made the city their home \u2014 which is expected to boost the market\u2019s resilience.<\/p>\n
Property companies listed in Dubai are already rebounding from the declines seen after the war started Feb. 28. Shares of Emaar Properties PJSC, Dubai\u2019s largest developer, have rallied about 16% from their low in mid-March.<\/p>\n
\u201cThere still is liquidity in the market,\u201d Katralnada Binghatti, CEO of developer Binghatti Holding Ltd. told Bloomberg Television last month. \u201cThe market behavior still seems relatively stable.\u201d<\/p>\n
In 2009, Dubai was pushed to the brink of default after a real estate slump triggered by a collapse in the off-plan market, where homes are sold ahead of construction.<\/p>\n
That slice of the market is being closely watched now as it requires high-conviction bets from foreigners on the city\u2019s long-term trajectory, said Matthew Bate, founder and CEO of property adviser and broker BlackBrick.<\/p>\n
The off-plan market, which accounts for nearly three-quarters of transactions in Dubai, saw the value of total sales drop about 13% in March from the previous month, according to REIDIN.<\/p>\n
Still, Sahil Khosla, chief executive officer of SOHO, a developer that\u2019s building luxury towers in Dubai, said he isn\u2019t concerned about a dramatic decline.<\/p>\n
\u201cThere are jitters in the market and off-plan will be the first to suffer because it\u2019s speculative,\u201d said Khosla. \u201cBut we\u2019re not worried the property market will cliff-dive because there are more end-users than ever before and any discounts we are seeing come after a massive ramp up in valuations over the past five years.\u201d<\/p>\n
Expats account for more than 85% of the UAE\u2019s population. Realtors in London, Monaco, and Marbella are reporting increased interest from wealthy Middle East residents looking to rent or buy properties, Bloomberg News has reported.<\/p>\n
\u201cThe directional trend for March is expected to continue through April, with transactional conditions softening as investor confidence is further tested,\u201d said Matthew Green, head of Middle East and North Africa research at real estate firm CBRE Group Inc.<\/p>\n
Firms will also have to contend with higher costs for building materials if the Strait of Hormuz remains closed for much longer, Danube Properties\u2019 founder Rizwan Sajan said in a recent interview.<\/p>\n
As sentiment has shifted, prominent developers have held calls with investors to allay concerns over a potential liquidity crunch.<\/p>\n
New projects continue to be rolled out, with developers announcing plans to add hundreds of homes. Developers from Emaar to Azizi Developments and Danube have pushed ahead with new projects.<\/p>\n
Some firms are offering incentives to sustain demand, such as lower upfront payments.<\/p>\n
\u201cI expected sales to be lower in a situation like this but we\u2019re still seeing sales,\u201d Samana Developers CEO Imran Farooq said. \u201cIt\u2019s taking a little longer to sell, but sales are happening with buyers from within the UAE as well as from Egypt and India.\u201d<\/p>\n
<\/p>\n
General view of Dubai Downtown showing world’s tallest building Burj Al Khalifa, in Dubai<\/p><\/p>\n","protected":false},"excerpt":{"rendered":"Foreign investors and well-heeled expatriates helped transform Dubai\u2019s housing market into one of the world\u2019s hottest. Now values…\n","protected":false},"author":2,"featured_media":627513,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,304135,304143,304140,164,304137,304141,256433,304136,304142,304139,304138],"class_list":["post-627512","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-dubai-home-prices","tag-dubai-luxury-homes","tag-dubai-property-market-decline","tag-economy","tag-foreign-investors-in-dubai","tag-geopolitical-impact-on-dubai","tag-iran-israel-war","tag-real-estate-market-dubai","tag-uae-housing","tag-uae-property","tag-uae-real-estate"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/627512","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=627512"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/627512\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/627513"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=627512"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=627512"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=627512"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}