Dubai real estate index collapses by 30% amid war - what's happening to the market
Kyiv • UNN
Due to military escalation and airport attacks, the DFM index lost all its 2026 gains. Investors are massively exiting assets amid UAE shelling.
The escalation of the war in the Middle East has already begun to significantly impact the region's financial markets. One of the most striking signals has been the sharp drop in Dubai's real estate index.
According to trading data on the Dubai stock exchange, the Dubai Financial Market (DFM) real estate index fell by approximately 30% in two weeks — from 16.8 thousand points to about 11.7 thousand, UNN reports.
Thus, the market effectively lost all the gains accumulated since the beginning of 2026. This decline was one of the largest in recent years and coincided with a sharp deterioration of the security situation in the region after the start of the war between Iran, the US, and Israel.
A rapidly growing market
Even at the beginning of 2026, the Dubai real estate market showed record growth rates. In 2024, the real estate index grew by approximately 63%, and in 2025, it added another 30%. In early 2026, the positive trend continued: in January–February alone, the index rose by another 20–21%.
This growth was due to several factors. Dubai became one of the main global centers for capital after the pandemic and the start of Russia's war against Ukraine. Investors from Europe, Asia, and post-Soviet countries actively entered the city.
In addition, the market was supported by large-scale construction projects, an influx of tourists, and the active development of the financial sector. However, the situation changed dramatically at the end of February.
War and missile strikes on the UAE
The index decline began after February 28, when the US and Israel launched a military operation against Iran. In response, Tehran struck the territory of the United Arab Emirates in early March.
On March 1, a drone attacked Dubai International Airport (DXB). The strike damaged one of the terminals, leading to an evacuation, and the main aviation hub's operations were temporarily halted. According to preliminary data, one person died.
Later, another drone crashed into the Marina Hotel in the city's tourist district, where, according to reports, American military personnel and intelligence officers might have been present. Drone debris caused a car fire on the Dubai Hills bridge.
On the same day, a repeat strike occurred near the second terminal of DXB airport, leading to a new halt in flights. Later, an Iranian drone attacked the building of the Dubai International Financial Centre (DIFC). These events were unprecedented for one of the safest financial centers in the world.
Panic in financial markets
Amid the attacks and the threat of new strikes, investors began to massively withdraw from real estate-related assets. In the first days of March, the stock markets of Dubai and Abu Dhabi even temporarily suspended operations.
Overall, in two weeks, the Dubai Financial Market real estate index fell by approximately 30%. In fact, this completely nullified the growth the market had shown since the beginning of the year.
For Dubai's real estate market, this is a particularly sensitive blow, as the construction and development sector is one of the key drivers of the emirate's economy.
Why real estate reacts most strongly
The real estate market traditionally is one of the first to react to geopolitical risks. For investors, these are long-term assets that require stability, predictability, and security.
For many years, Dubai has positioned itself as a "safe haven" for capital in the Middle East. That is why any strikes on the emirate's territory have a strong psychological effect on the market.
In addition, investors consider risks to the tourism sector, air travel, and financial infrastructure. All these factors directly affect the demand for housing, offices, and hotels.
Can the market recover quickly?
Despite the sharp decline, some analysts believe that the Dubai real estate market has high potential for recovery. In previous years, it has repeatedly demonstrated its ability to quickly respond to crises.
The key factor will be the further development of the conflict in the Middle East. If hostilities do not spread to other countries in the region and the security situation stabilizes, investors may return to the market quite quickly. However, in the event of a prolonged war or new attacks on UAE territory, the decline may continue.
Regional risks for global capital
The situation in Dubai shows how closely geopolitics and financial markets are intertwined today. Even one of the world's most stable financial centers proved vulnerable to military escalation.
For global investors, this is a signal of increasing risks in the Persian Gulf region. That is why the further development of the conflict between Iran, the US, and their allies could have a broader impact not only on Middle Eastern markets but also on the global economy.
If tensions persist, the consequences could be felt not only by financial markets but also by international trade, energy, and investment flows.