Dubai property sector shows early signs of weakness

By Federico Maccioni, Rachna Uppal, Hadeel Al Sayegh and Nazih Osseiran

DUBAI, March 20 (Reuters) - Dubai's spot marketplace is opening to amusement aboriginal signs of weakening astir 3 weeks into the U.S.-Israeli warfare connected Iran, with information from analysts showing tanking transaction volumes and immoderate existent property agents ‌pointing to terms reductions.

The war, and Tehran's strikes against Israel, U.S. bases and Gulf states including the United Arab Emirates, person pierced Dubai's representation arsenic ‌a harmless haven for the world's wealthy.

Real-estate transaction volumes successful the UAE fell 37% year-on-year successful the archetypal 12 days of March, and 49% month-on-month, Goldman Sachs analysts estimated successful a enactment published this week.

Some ​properties are already being offered astatine large discounts, with terms cuts of 12-15%, according to immoderate existent property agents and messages connected societal media that Reuters reviewed.

For instance, a seller was looking for a "quick sale" for a spot adjacent to the Burj Khalifa - the world's tallest gathering - a connection shared by an cause read. The seller was looking for $650,000, down astir 12% from a erstwhile terms of $735,000 "due to the existent situation". The cause spoke connected information of anonymity due to the fact that of the sensitivity of the matter.

An off-plan level successful Dubai's ‌coveted Palm Jumeirah was besides being offered astatine a 15% discount ⁠to its archetypal terms to astir $2 million, according to a connection reviewed by Reuters connected a WhatsApp radical created a week into the war.

HEADING FOR A SLOWDOWN?

The UAE's existent property roar has mirrored Dubai's rise, but determination were already concerns that the marketplace was ⁠headed for a slowdown aft 5 years of rising prices.

The struggle is the biggest trial to day for the market, wherever request was fueled by an influx of affluent migrants attracted by the UAE's tax-free regime.

Shares successful spot developers person fallen, with Emaar Properties, the developer down Burj Khalifa, down much than 26% connected the Dubai bourse since the warfare began.

Goldman Sachs said ​the ​total worth of completed transactions truthful acold this period was down by fractional compared with February - ​a overmuch bigger driblet than during the 2024 Dubai floods oregon ‌a erstwhile Iran-Israeli struggle past June - though it said the median transacted terms was lone down 3% connected a twelvemonth earlier.

Analysts astatine Citi accidental the warfare introduced "considerable risk" for Dubai's aboriginal colonisation maturation expectations arsenic it could deter home-buyers and spot investors. They present presume 1% colonisation maturation successful Dubai this year, and 2-2.5% annually betwixt 2027 and 2031, against 4% successful caller years.