Abu Dhabi, United Arab Emirates – Web Desk: The United Arab Emirates’ booming property sector is facing a major test after Iranian missile strikes rattled investor confidence and disrupted the region’s reputation as a safe haven for global capital.
Missile attacks targeting airports, ports and residential areas in Dubai and Abu Dhabi have shaken the Gulf’s image of stability, raising concerns among international investors who have fueled the UAE’s real estate expansion over the past decade.
The property boom, driven largely by foreign investment, is now under pressure as geopolitical tensions in the Middle East escalate following the strikes on Iran.
Shares of major UAE developers dropped sharply on Wednesday. Aldar Properties, Abu Dhabi’s largest listed developer, and Emaar Properties, the company behind iconic projects such as the Burj Khalifa, both fell around 5%. Bond prices across the sector also declined, reflecting growing investor concerns.
Analysts say bond markets — a key funding source for developers — are effectively closed for new issuances as risk premiums rise amid regional tensions.
Developers had previously been selling off-plan residential projects within hours of launch. According to property consultancy Betterhomes, off-plan deals accounted for nearly 65% of Dubai property transactions in 2025, meaning most buyers invested in homes that were still under construction.
With uncertainty increasing, the pipeline of upcoming projects may face weaker demand, particularly if foreign investors reduce exposure to Gulf real estate markets.
Despite the market selloff, some industry executives have attempted to reassure investors. Ziad El Chaar, chief executive of Dar Global, said projects across the Gulf Cooperation Council remained on schedule.
“In this region we know things start quickly and end quickly, and we overcome this because the fundamentals across the GCC nations are strong,” he said.
However, others in the financial sector say the fallout is already visible. A senior real estate banker told Reuters his firm had postponed a planned capital raising for a UAE property project as investor sentiment deteriorated.
“Investors are not thinking at this stage of investing in the region,” the banker said, noting that the risk premium for UAE real estate has increased significantly.
Dubai’s skyline has transformed dramatically over the past two decades through ambitious construction projects, including the luxury island development Palm Jumeirah and the expanding Palm Jebel Ali project.
The property boom accelerated following the COVID-19 pandemic as the UAE’s tax-free environment, economic reforms and relaxed visa policies attracted wealthy migrants and investors.
Capital inflows surged as Russian nationals relocating after the Russia–Ukraine War, billionaires, family offices and hedge funds poured billions into UAE real estate.
By 2025, the UAE’s population surpassed 11 million, with expatriates making up nearly 90% of residents, according to official data.
Property prices surged as demand grew. Residential prices in Dubai rose roughly 60% between 2022 and early 2025, according to Fitch Ratings, while Abu Dhabi housing prices increased nearly 32% over the same period.
However, even before the recent geopolitical escalation, analysts had warned about a potential supply glut. JPMorgan estimated that Dubai could add between 300,000 and 400,000 new housing units by 2028 — a level that may exceed population growth.
Economists at Abu Dhabi Commercial Bank said foreign demand would remain the key factor determining whether the UAE property sector can absorb the incoming supply.
Experts warn that prolonged geopolitical uncertainty could weaken investor confidence in the real estate sector.
“Real estate investment typically relies on stability, visibility and sustained investor confidence,” said Ryan Lemand, co-founder and chief executive of Neovision Wealth Management in Abu Dhabi.
“If regional tensions persist, those factors could be significantly affected.”
