Missile and drone strikes on Dubai immediately impacted financial markets. According to preliminary reports, as many as 165 ballistic missiles and over 540 drones were used in the attack, reportedly as Iran’s response to earlier military actions in the region. The Dubai stock exchange was closed for two days—for the first time since the pandemic. Saudi Arabia’s Tadawul index fell by several percent, while oil prices rose by around 10%. This turmoil will also affect the real estate market.
In recent years, Dubai has been like a high-performance sports car for many investors—capable of speeds unattainable for mass-produced vehicles. That was tempting, but it also came with risks. The faster the car, the easier it is to crash on a sharp turn. Unfortunately, many buyers were living in a bubble, ignoring potential risks associated with purchasing property in that market, says Maciej Gołębiewski, a real estate investment expert and creator of dobregonajmu.pl.
A magnet for investors
The largest and most well-known city in the United Arab Emirates attracted capital from around the world with simple arguments: rental yields of around 6.6% gross and no income tax, making net returns nearly identical. There was also the added benefit of a golden visa. For many investors, the ability to purchase property even with cryptocurrencies, along with relatively simple procedures for foreign buyers, was also important.
One thing needs to be made clear: Dubai is far more unpredictable than Europe. After the 2008 crisis, prices fell by half. Then came stagnation, a pandemic-driven dip, and a powerful rally between 2021 and 2025, when property prices rose by 60–70%. By late September 2025, UBS Bank was already warning that a price bubble was forming in Dubai. In its Real Estate Bubble Index report, Dubai scored 1.09, indicating an elevated risk zone for a real estate bubble. Just before the attacks, however, the market was still breaking records. In January 2026 alone, more than 21,000 units were sold—86% more than a year earlier, the expert comments.
What could happen tomorrow?
Dubai’s real estate market is primarily driven by external capital. Over 68% of buyers are foreigners, and in 2025 alone around 10,000 millionaires relocated to the emirate. At the same time, approximately 90% of the UAE’s population consists of expatriates—people working or investing there temporarily. Demand is therefore strongly tied to the inflow of people and money. If geopolitics scares them away, the market will feel it immediately.
I see three most likely scenarios. The first is an escalation of the conflict, capital outflow, and a price drop of 15–25%. The second assumes a quick return to normal and a market rebound, similar to what happened after COVID-19. The third scenario is the bursting of a speculative bubble, with price declines of 30–50%, says Maciej Gołębiewski. The market is relatively shallow and highly sensitive to shocks. History shows that in 2008, property prices in Dubai fell by as much as 50% in less than two years, and similarly strong fluctuations occurred during the pandemic, he adds.
A voice of reason
Recent events show that even places considered safe investment havens can suddenly find themselves at the center of a global conflict. At such moments, not only investment returns matter, but also economic stability, geopolitical security, and market resilience to sudden shocks.
There are no miracles in investment markets. If high returns are promised somewhere, it usually comes with higher risk—both economic and geopolitical, says Maciej Gołębiewski. That’s why many investors try to diversify their capital across different countries and markets. In times of tension, however, the most important thing is to stick to data and strategy, not emotions. It often turns out that more predictable markets—such as major cities in Poland—are simply calmer, even if the potential return is slightly lower, he concludes.
