Sales of luxury real estate in Dubai slowed sharply after the outbreak of war in the Middle East, and the market, according to analysts, “fell off a cliff.”
Sales in the city fell by 19% in May compared to the previous month, which is a significant acceleration compared to April when the decline was 4%, according to research by ValuStrat.
The total number of transactions is now, according to the data, below half of the level compared to the same period last year.
“The existing real estate market hasn’t seen an annual decline like this since the pandemic,” said Haider Tuaima, head of real estate market research at consulting firm ValuStrat.
The segment of luxury villas and apartments has been particularly hard hit, with owners having to drop asking prices by tens of millions of pounds to attract buyers.
Another survey by Reidin found that property worth 22.5 billion dirhams (about $6.1 billion / £4.5 billion) was sold in May, down 42% from April.
Before the war, Dubai’s market saw strong growth thanks to a large influx of wealthy foreigners and tax breaks, including zero income tax, the Guardian writes.
However, the beginning of the conflict in the Middle East at the end of February shook the market, and in March, according to reports, an Iranian missile hit a hotel in the Palm Jumeirah area.
Due to the uncertainty, part of the rich buyers leave the market, and brokers state that certain properties are now being sold with discounts of 20 to 25% compared to earlier estimates.
Experts warn that the market could face further decline until the geopolitical situation is clarified, and some international buyers are already turning to other luxury destinations such as Milan, London and Singapore.
Analysts also warn that smaller brokers may be forced to close their operations due to the sharp drop in traffic.
Overall, the Dubai market is undergoing a strong correction after a period of extremely rapid growth and record sales of luxury properties.
