Why the West Asia crisis has pushed Dubai's real estate into a 'wait-and-watch' mode, but the luxury market holds firm

The West Asia crisis has moderated real estate activity, with buyers taking a more cautious and selective approach, said Andrew Cummings of Savills Middle East

The US-Iran war has introduced a degree of ‘short-term caution’ into the Middle East real estate market, leading to a broader ‘wait-and-watch’ approach among buyers. Decision-making is taking longer, with purchasers becoming increasingly selective and price-conscious, Andrew Cummings, Head of Residential Agency at Savills Middle East, told Hindustan Times Real Estate.

Dubai real estate: Transaction activity has moderated from the exceptionally strong levels seen at the beginning of the year, with buyers adopting a more measured approach across both off-plan and secondary markets, said Andrew Cummings, Head of Residential Agency at Savills Middle East

“The recent geopolitical developments have contributed to a degree of short-term caution in the market, although we would be careful about attributing softer activity solely to regional tensions. What we are seeing is a broader wait-and-watch approach amongst buyers, with decision-making taking longer and purchasers becoming increasingly selective,” he said.

Transaction activity has moderated from the exceptionally strong levels seen at the beginning of the year, with buyers adopting a more measured approach across both off-plan and secondary markets.

“We have also seen some softening in mortgage-backed activity as purchasers take longer to evaluate opportunities and focus more closely on value, quality and location,” Cummings said.

“We are also seeing buyers become more price-sensitive than they were over the past few years. Demand remains present, but purchasers are taking more time to evaluate opportunities and are adopting a more disciplined approach to decision-making,” he said.

According to the Savills Residential Investor Sentiment Survey, demand remains intact, with buyers delaying decisions rather than abandoning them. Nearly 45% of respondents intend to purchase property within the next 12 months, while 32% remain undecided, indicating deferred rather than diminished demand.

Ready homes gain preference

The Savills survey highlights a clear shift towards ready and secondary-market properties. Around 60% of respondents prefer ready homes, compared with 23% who favour off-plan projects. The preference reflects a greater focus on certainty around delivery timelines, pricing and immediate occupancy or rental returns.

Investment remains the primary driver of demand, with 52.1% of respondents saying they are buying property as an investment. Location, connectivity, product quality and the developer’s track record are also playing an increasingly important role in purchase decisions.

Indian HNI buyers show similar caution

While Savills does not have nationality-specific data for Indian HNIs and UHNWIs, Cummings said the firm is observing similar behavioural trends among international buyers.

“They are taking longer to make purchase decisions, becoming more selective, and prioritising certainty, value and long-term quality,” he said.

Dubai luxury market remains resilient

Despite the more cautious sentiment, the prime segment remains resilient. Dubai recorded 2,064 transactions for homes priced above AED 10 million in Q1 2026. Activity moderated through the quarter, from 976 transactions in January to 656 in February and 432 in March, but the luxury market continues to attract strong interest at a more measured pace.

Villas continue to dominate the prime segment, accounting for 76% of transactions above AED 10 million.

Off-plan properties also remain a major driver of activity, accounting for 72% of overall transactions in Q1 2026 and 79% of prime transactions above AED 10 million. The Oasis, Dubai Hills Estate and Jumeirah Golf Estates were among the key locations driving prime transaction volumes during the quarter, Cummings said.

Secondary apartments may face greater pressure

Buyer selectivity and rising supply could put greater pressure on older secondary-market apartment stock. Around 90,000 residential units are expected to be delivered over the coming months, giving buyers significantly more choice, Cummings said.

Older secondary apartments could therefore face greater pressure, particularly where newer developments offer stronger amenities, modern specifications and more attractive payment plans, he said.

However, demand remains intact. Successful project launches across Dubai and Abu Dhabi show that buyers continue to transact when pricing, product quality and location meet expectations.

“At the same time, demand has not disappeared. We continue to see successful project launches across both Dubai and Abu Dhabi, demonstrating that buyers remain willing to transact when pricing, product quality and location align with expectations. Villas and well-located prime assets are therefore likely to remain relatively more resilient,” he added.