Key facts
- Dubai property sales fell 19% in May from April, accelerating from a 4% drop in April.
- Sales are now less than half of last year's levels.
- Property worth 22.5bn dirhams ($6.1bn/£4.5bn) was sold in May, a 42% decrease from April.
- Luxury property prices have seen significant reductions.
- International buyers, particularly from Western Europe, are showing reluctance to invest.
- The slowdown is expected to lead to the closure of several real estate agencies.
Dubai's real estate market has experienced a significant downturn, with sales plummeting in recent months, a trend attributed to the ongoing conflict in the Middle East. ValuStrat reported a 19% decrease in sales in May compared to April, a sharp acceleration from the 4% drop seen in April. Transactions have fallen to less than half of their level compared to the same period last year.
Reidin, another research firm, found that property worth 22.5 billion dirhams ($6.1 billion) was sold in May, a 42% decline from April and approximately half the value recorded before the conflict began in late February. This marks a substantial correction for Dubai, which had previously seen a boom driven by high-earners attracted to its zero income tax policy.
Luxury property sellers have reportedly reduced asking prices by tens of millions of pounds. Yasin Valimulla, a buying agent specializing in high-value properties, noted that sales are currently being made at a 20%-25% discount. He also stated that many high-net-worth individuals who previously bought in Dubai have since left the city, and Western European buyers are now more hesitant, preferring to wait for geopolitical clarity.
Knight Frank had previously identified Dubai as the world's busiest city for luxury real estate in the previous year. However, the market is now undergoing a correction, with Valimulla suggesting that the previous high numbers were unsustainable. The impact of this correction remains uncertain pending geopolitical developments.
Richard Waind of Cencorp indicated that the current slowdown, described as a 'black swan event,' is pressuring smaller real estate agencies that were established during the market's peak. The number of brokers in Dubai has grown significantly over the past decade, and many are now expected to face closure.