War jitters cool Dubai real estate demand among Indian buyers

A war-driven downbeat sentiment is weighing on Dubai’s real estate market, particularly among Indian investors, who form the emirate’s largest overseas buyer base. While Indian buyers have not abandoned Dubai as their favorite destination for real estate investments, their psychology has changed from eager buyers to bargain hunters, Ritu Kant Ojha, real estate strategist and CEO of Proact Luxury Real Estate, tells EnterpriseAM.

Indian nationals were the largest foreign buyer group in Dubai’s residential market in 2025, investing an estimated AED 35-40 bn (USD 9.5-11 bn) last year alone. As of late 2024, over 29k Indian buyers collectively owned more than 35k homes in the emirate. “Confidence levels amongst the largely expat [Indian] population will undoubtedly be tested,” Faisal Durrani, head of research at Knight Frank MENA, tells us.

The immediate impact of the regional conflict has been on activity levels rather than headline prices. Inquiries from Indian buyers dropped by up to 20%, while bookings were down some 15% compared to pre-war levels, and transaction volumes saw a sharp m-o-m dip, Abhijeet Saxena, sales VP at Delhi-based Mirus Global Real Estate, tells us.

IN CONTEXT- Dubai’s residential capital values fell 5.9% m-o-m in March — its first price decline since the pandemic — with several analysts penciling in a moderation phase for 2026.

Prices have not corrected across the board: “We are absolutely seeing distress transactions right now — even in ultra-premium locations like Palm Jumeirah and Emirates Hills,” Ojha notes. Similar micro-corrections in investor-heavy off-plan projects and overpriced launches are being seen, Saxena says, adding that prime and supply-constrained assets continue to hold firm.

The market has handed pricing power to liquidity-rich investors. Cash buyers, particularly in higher-ticket segments, are now dictating the terms as sellers look to liquidate assets in response to war-led panic, according to Ojha.

Developers respond with flexibility: “Major players like Damac, Binghatti, and Sobha are stepping up with solid incentives to keep sales momentum going. They are currently offering 4% DLD waivers and topping that off with another 3-4% in direct markdowns,” Ohja tells us. However, he adds, these specific sweeteners are temporary and will likely be withdrawn by early May.

Developers are loosening earlier rigid payment schedules and offering plans for buyers to stagger commitments over the construction cycle. Banks are expanding access to mortgages and offering relatively competitive rates to help maintain liquidity in the system, particularly for buyers who might otherwise delay entry, says Saxena.

Despite the slowdown, there is little evidence of capital redirecting back to India. “Wealthy Indians treat their home markets differently. Dubai is where they park their money for stability and a currency hedge,” Ojha tells us. Dubai offers average rental yields of 6-9%, against just 2-3% in major Indian cities like Mumbai and Delhi.

Institutional investors are likely to reassess geopolitical risks and adopt a cautious wait-and-see approach instead of exiting the market. “Given the residential market’s historical sensitivity to investor sentiment and inward migration flows, shifts in confidence levels will be a critical determinant of price stability in the short term,” according to Knight Frank’s Durrani.