51% — that’s how much the UAE’s real estate activity has dropped since the war began, according to a Goldman Sachs report picked up by Investing.com. Heightened regional uncertainty is weighing heavily on the UAE property market, with transaction values plunging by half m-o-m in the first half of March.

The war has triggered a sharper downturn in transaction values — down 31% y-o-y — than any previous disruption, including the Dubai floods in April 2024 and the November 2024 regional tensions, analysts noted. The overall volume of transactions also fell by 38% y-o-y, driven by a 52% decline in the off-plan segment.

The secondary market is bearing the brunt of volatility, with transactions dropping 59% y-o-y in the second week of March. The villa segment saw the most dramatic hit, collapsing 89% y-o-y, while apartments saw a 59% y-o-y drop, with median prices dipping 8% m-o-m through 12 March.

On the other side of the coin

The market is not reacting uniformly, with branded off-plan projects continuing to attract significant capital. Luxury developer Ohana Developments’ Manchester City Yas Residences in Abu Dhabi, for example, reported a record-breaking AED 6 bn in sales within just 72 hours of its launch, according to a post on LinkedIn. With international buyers comprising 65% of its investors, the project’s sales suggest that appetite remains intact in some areas.

The majority of owners aren’t dropping prices, refusing to go below pre-war levels, Fäm Properties CEO Firas Al Msaddi told Khaleej Times. Al Msaddi suggests that current selling is largely driven by investors who entered the market before 2022 and have seen their properties’ valuations appreciate by up to 300%, and are now looking to cashout on returns.

Liquidity in the market remains strong, and plenty of buyers are still seeking attractive prospects, Springfield Properties CEO Farooq Syed is quoted as saying. Al Msaddi noted that, in the past, buyers investing during times of uncertainty reaped sizable benefits afterward and expects this cycle to be much the same.

Looking ahead

S&P Global Ratings is ruling out a 2008-style market crash, provided the war does not exceed the four-week mark, according to a recent note.

The cushions: Analysts at S&P maintain that rated developers enter this period with significantly stronger balance sheets than during the 2008 crisis, noting high-liquidity cushions and rating headroom to absorb short-term shocks. Regulatory protections — such as escrow mandates and the ability for developers to maintain up to 40% of property value upon buyer default — provide a safety net.

Nonetheless, the agency indicates that new project launches will likely be postponed as developers prioritize liquidity over expansion, a view also shared by Fitch Ratings. This may shift market focus toward the secondary segment while investors test new price baselines, S&P Global said.

The agency expects apartment prices to continue facing more pressure than villas due to a heavy supply pipeline, exacerbated by potential supply chain bottlenecks at the Strait of Hormuz that could jack up construction costs and delay project handovers.

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