Overview of the Situation#
Transaction activity in the UAE real estate market has sharply declined since the onset of the ongoing conflict in the Middle East. Goldman Sachs reports that this heightened regional uncertainty is affecting property demand significantly.
Decline in Transactions#
As the conflict enters its third week, Goldman Sachs analysts, led by Harsh Mehta, have noted a clear slowdown in property transactions. In the first half of March, overall transaction values dropped by 31% compared to the previous year and a staggering 51% compared to the previous month. This decline is more severe than in past disruptions, such as the Dubai floods and previous regional conflicts.
Specific Market Weakness#
The downturn has been particularly pronounced in the secondary market, which saw a 59% year-over-year decline, especially in the villa segment, which plummeted by 89%. Overall transaction volumes also fell sharply, down 38% year over year, largely due to a 52% drop in the off-plan segment and a 59% decrease in apartment transactions.
Price Trends#
In terms of pricing, median apartment prices per square foot have decreased by 3% year over year and 8% month over month for the period from March 1 to March 12. Villa prices, however, remain higher on an annual basis, increasing by 16% year over year, though they fell by 2% compared to the previous month. On average, property prices across all types rose by 1% year over year but dropped by 7% month over month.
Impact on Major Developers#
Shares of Emaar Properties PJSC, one of the UAE’s largest real estate developers known for iconic projects like the Burj Khalifa, have fallen nearly 40% since the conflict began, as investors reevaluate the outlook for the region's property sector.