Over the past four years, Dubai’s real estate market has been on a tear, soaring nearly 70% and outpacing nearly every global rival. But after a historic run, the rally now faces its stiffest test yet — a cocktail of geopolitical tensions, oil price volatility, and wavering investor confidence.
At the heart of the storm: U.S. President Donald Trump’s sweeping tariffs, which have shaken markets and sent crude prices tumbling below $65 a barrel. With OPEC+ ramping up supply and global trade sentiment on edge, the Gulf’s oil-fueled economies are feeling the strain — and so is the region’s property darling.
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Momentum Cools As Buyers Blink
Dubai’s property surge had already begun to lose steam. Prices climbed 16% last year, down from 20% the year before, signaling growing buyer fatigue in the face of steep valuations. Analysts now warn of deeper cracks forming beneath the surface.
“If oil stays weak, we’ll see a slowdown in government spending and hiring,” said Mohammed Ali Yasin, CEO of Oracle Financial Consultancy. “That’s a problem for a city whose real estate boom depends on expat-driven demand.”
Global Jitters Threaten Foreign Investment
Dubai’s market has always been sensitive to shifts in global sentiment — and this time is no different. With asset values under pressure from London to Shanghai, international investors may hesitate to double down.
“There’s real uncertainty around whether overseas buyers will follow through with deals here,” said Taimur Khan, Head of Research for the Middle East and Africa at JLL. “Especially if they’re facing turbulence at home.”
The city’s history offers a cautionary tale. When oil prices collapsed in 2014 and again in early 2020, Dubai’s average home prices plunged 33%, eroding investor confidence and trimming government revenue.
China’s Slowdown Could Be A Game-Changer
Although Trump has walked back many of the tariffs he unveiled this month, the hefty 145% levy on Chinese imports remains in place — and that’s a red flag for the Gulf, given China’s outsized appetite for Middle Eastern oil.
“People are underestimating how much China’s slowdown could hurt our region,” Yasin noted. “If oil hovers around $60, we’ll see delayed projects, tighter budgets, and ultimately fewer jobs.”
Goldman Sachs echoes the concern, forecasting that Saudi Arabia, Dubai’s neighbor and economic partner — could see its budget deficit balloon to $67 billion, jeopardizing plans to modernize its economy. For Dubai, that matters. Many firms based in the emirate use it as a launchpad into Saudi Arabia, meaning canceled contracts there can ripple through the job market here.
A Rally Powered by Policy — But Is It Enough?
Dubai’s recent boom has been driven less by oil and more by smart policymaking. From agile pandemic response to liberal visa reforms — including long-term golden visas — the emirate has positioned itself as a magnet for global wealth. Russians looking for asset safety, crypto millionaires chasing tax-friendly havens, and remote-working expats have all flocked in.
Developers, for now, remain upbeat. Binghatti Properties says it closed all planned sales last week despite the turbulence. And Louis Harding, CEO of Betterhomes, believes Dubai is better insulated than in the past.
“Expats are more likely to stick around now, even if things get rocky,” Harding said. “That’s a game-changer.”
Currency Moves To Offer Temporary Relief
Adding to Dubai’s near-term appeal: a weaker dollar. The Bloomberg Dollar Spot Index slid 2.4% last week, hitting its lowest point since October. Since Gulf currencies are pegged to the dollar, that’s effectively a discount for foreign buyers converting euros, pounds, or rupees.
Still, not all signs are reassuring. Dubai’s real estate bellwether, Emaar Properties, has dropped over 10% since Trump’s April 2 tariff announcement. Rival Aldar is down more than 5%. Both stocks are still up roughly 40% year-over-year — but the rally is looking shaky.
The Road Ahead Is Foggy
With potential currency devaluations looming in some emerging markets as a reaction to tariffs, Dubai could face more pressure. As JLL’s Khan puts it: “There are a lot of known unknowns.”
Dubai’s market has reinvented itself before — but whether it can weather this latest global shakeup without losing momentum is the question on every investor’s mind.
