In the first week of March, my phone did not stop ringing. A family from London wanted to know whether they could pause the installments on their off-plan villa. A long-time tenant asked whether her landlord could still raise the rent. A developer client wanted to understand exactly what it could, and could not, say to its buyers about handover dates. Each call carried the same question beneath the legal one: Is my home, my investment, my future here still safe?

Seven months on, I can answer that question with even more confidence than I could then. We all know the market has changed, and it would be a disservice to pretend otherwise. But the legal and regulatory foundations that Dubai spent fifteen years building have done precisely what they were designed to do. This article looks at where the market stood before the conflict, what shifted after February 28, and, most importantly, what the law means for the people I advise every day.

Before February 28: a market at full stride

Dubai entered 2026 in one of the strongest positions in its history. In 2025, the emirate recorded more than AED 917 billion in real estate transactions, the highest annual figure ever. Sales alone exceeded AED 682 billion, up more than 30% year on year, and the market drew over 193,000 investors, roughly two-thirds of them first-time participants.

Prices reflected that appetite. According to the figures, mainstream values had risen by an average of nearly 83% since 2021. Buyers competed for units, developers sold out launches in hours, and the market operated firmly in the seller’s favor.

Yet even then, careful observers were preparing for a cooler chapter. Fitch had forecast a correction of around 15% between mid-2025 and the end of 2026, and an enormous supply pipeline was on the horizon, with roughly 385,000 residential units under construction and most due for delivery between 2026 and 2028. In other words, a rebalancing was already expected.

The shock: what changed in the spring of 2026

On February 28, 2026, the United States and Israel launched coordinated strikes on Iran. Iran’s retaliation reached across the Gulf, and in the opening days of the conflict, targets in Dubai came under fire. For a city whose global brand rests on safety and stability, that was a profound moment, and, as expected, the market reacted the way markets do.

Transaction activity slowed sharply after the war began, with the decline concentrated in the off-plan segment, which accounts for roughly three-quarters of deals. Citi cut its 2026 population growth projection for Dubai to about 1%, down from around 4% in recent years, and warned that the conflict could test the city’s safe-haven appeal.

But the full picture was more nuanced than the headlines. In the first quarter, the value of foreign transactions rather than declining, it rose by nearly 26% compared with the prior year, and the number of foreign deals grew 11% to more than 48,000, including buyers from parts of Western Europe who had not previously been active here.

When all this happened, while having a cigar with a few friends from fund management, we all came to the same conclusion that even today we swear by: during the conflict the capital hesitated rather than fleeing.

After the shock: a buyer’s market takes shape

The months since have been defined by a fragile but meaningful de-escalation: a ceasefire in April, a US-Iran memorandum of understanding in June, and a summer in which hostilities flared again elsewhere in the region while Dubai itself remained out of the line of fire. As Mr. Kissinger rightfully put it in one of his books, while diplomacy continues, so does the market.

What has emerged is a genuine shift in bargaining power. Developers, rather than cutting headline prices, have turned to indirect incentives, including low down payments and absorbing or waiving the standard 4% Dubai Land Department registration fee. These are concessions that simply did not exist during the 2023 to 2025 boom.

At the same time, activity has steadied. Dubai recorded AED 225.7 billion in residential transactions across more than 81,800 deals in the first half of 2026. In August, traditionally a quiet month in the UAE, the market still delivered roughly 12,000 sales worth about AED 28.6 billion, and freehold rental registrations continued to climb. Major developers are signaling long-term confidence, most visibly Emaar’s announcement of a roughly $55 billion project in central Dubai.

Today, demand is driven more by residents than by overseas investors. For end users, particularly families who have been priced out or forced to rent for years, this is the most favorable window in a long time.

What the law says, and what it does not

This is where I spend most of my working hours now. Uncertainty breeds assumptions, and some of the most common assumptions I hear are simply wrong. Here is what my clients most need to understand.

Force majeure is real, but it is narrow. War is recognized as a potential force majeure event in the UAE. The principle was long found in the Civil Transactions Law and is carried forward in Federal Decree-Law No. 25 of 2025, the new Civil Transactions Law that came into force on June 1, 2026. The local courts have applied it to armed conflict before; in 2024, the Dubai Court of Cassation, for example, treated the outbreak of the Russia-Ukraine war as force majeure in a shipping dispute which involved two cargo containers from Odessa to the UAE. But the party relying on it must show that the event was unforeseeable, unavoidable, and that it made performance genuinely impossible, not merely more expensive or less attractive. A softer market is not force majeure.

Off-plan buyers generally cannot walk away on that basis. Most off-plan sale and purchase agreements state expressly that force majeure does not excuse the buyer’s obligation to pay installments. A buyer who simply stops paying risks losing amounts already paid, subject to the statutory protections in Article 11 of Dubai Law No. 13 of 2008 (as amended by the Law No.19 of 2017), which ties what a developer may retain to the project’s stage of completion. Before any client stops paying, we review the contract, the construction status, and the alternatives, including negotiated rescheduling, which some of the developers are open to right now.

Developers may rely on force majeure for delays, within limits. We have already seen notices sent to the buyers invoking force majeure for handover delays, citing material shortages and higher shipping costs. Where properly substantiated, this can suspend delay penalties that SPAs often provide after a grace period of six to twelve months. However, force majeure is not a license to cancel a project or rewrite the contract. Notices must be specific, supported, and consistent with the agreement and RERA requirements. Buyers who receive a blanket notice should have it reviewed rather than accept it at face value.

Your money in escrow is protected. I was recently part of a panel in the EU, where the audience had raised several questions related to investing in the Dubai real estate market. I will write the same thing I told our European audience: under the Dubai Law No. 8 of 2007, payments for off-plan units must be deposited into a dedicated project escrow account and released to the developer against construction progress. This framework, built in the aftermath of 2008, is one of the main reasons this downturn looks nothing like that one.

Tenants still owe rent. Where the property remains available for use, the obligation to pay rent generally survives external events. Equally, landlords remain bound by Dubai’s rental laws on notice periods and permitted increases. In a softening rental market, renegotiation at renewal is often the most productive path for both sides.

Hardship is different from impossibility. Where an exceptional event makes performance excessively burdensome rather than impossible, UAE law allows courts, in appropriate cases, to rebalance obligations. These claims are fact-specific and the bar is high, but they are worth assessing in long-term commercial arrangements.

Practical guidance for the months ahead

For buyers, this is a negotiating market. It is a good time to push for better payment plans, fee waivers, and clear handover terms, and to have every sale and purchase agreement reviewed before signing, paying particular attention to its force majeure and delay compensation clauses.

Off-plan investors who are feeling financial pressure should speak with their developer and their lawyer before missing a payment. Rescheduling the installments or assigning the contract to another buyer is almost always a better outcome than default.

Sellers, meanwhile, should price to the market they have, not the one they remember. Properties that are priced realistically are still selling and there is always a buyer looking for a good deal.

Tenants and landlords alike can treat renewal as a chance to renegotiate. Whatever they agree, they should put it in writing and register it within the Ejari or through the proper amendments.

Finally, developers should communicate with buyers early, specifically, and in writing. Any force majeure claim should be fully substantiated, and buyers should be kept informed throughout. The trust a developer preserves now will be worth far more than any penalties it avoids.

A closing word

If we look back at the 2008 crash and the pandemic, each time, Dubai emerged with stronger rules and a more mature market. This period is no different as the prices have adjusted, sentiment is more measured, and the escrow regime along with the regulatory oversight that protects property owners have held firm under real pressure.

If you own, rent, or are considering buying property in Dubai, my advice is simple: stay informed, read your contracts, and seek advice before you act. The ground beneath this market has been tested, and it is holding.

By Eduard P. Nedelcu, ESQ

This article provides general information and does not constitute investment advice. Market figures are drawn from publicly reported data as of early October 2026. Readers should seek advice on their specific circumstances.