Estonians Want to Invest in Dubai Real Estate Despite Iranian Conflict

In spring, when the Iran war began in the Middle East, the number of real estate transactions in Dubai fell by nearly a quarter compared to a year ago, but prices did not fall. Kinnisvara24 portal currently has 229 active Dubai offers and Estonians' interest in the region has not waned.

„In the first weeks of the war, my phone and inbox were full of client questions. People who had already invested wanted to know if they should sell their property quickly, and buyers who had recently signed reservation agreements wanted to know if they could back out of the deal. I advised against making panic decisions, because a quick sale could have meant financial loss," said Sanders Skorik, broker and managing director of Skover Real Estate L.L.C, which operates in the Dubai and Abu Dhabi real estate market.

According to him, both investors and homebuyers initially put their transactions on hold. The number of Dubai real estate transactions decreased to 51,752 transactions from the beginning of March through the end of June this year. In the same period last year, 68,456 transactions were made, so the number of transactions fell by nearly a quarter.

Skorik said prices did not fall, however, because there were more buyers looking for real estate at favorable prices than owners under pressure to sell. „In the United Arab Emirates, approximately 70% of real estate is purchased with cash. If there is no bank loan and there is no rush to sell, the owner can rent out the property and wait for a more suitable time," he explained.

Developers also did not begin to significantly reduce apartment prices, but instead postponed the launch of some new projects and made payment terms more flexible. Instead of the typical 20% down payment, some projects offered the option to start with a 5–10% down payment. In this way, developers reduced the buyer's initial cash requirement without offering 10–20% discounts on projects.

A large portion of apartments are sold in Dubai and Abu Dhabi two to three years before completion, and all transactions are registered with the land office. „By selling cheaper, developers would put themselves in a difficult position, because they would no longer be able to sell the next building at a higher price," said Skorik.

The impact of the war was most noticeable among price-sensitive buyers. „Estonian clients have not disappeared, but there are fewer of them. Primarily, investors with budgets of 200,000–300,000 euros have put their purchase decisions on hold. Clients whose budget is half a million to a couple of million euros call themselves and ask what they can buy for that right now," Skorik said.

Based on his transactions, buying interest recovered within a month. In April, he completed two transactions in Abu Dhabi in the 650,000 euro price range and one transaction in Dubai in May at 600,000 euros. In June, he sold a townhouse and two villas in Abu Dhabi ranging from 1.1 to 1.6 million euros. Currently, he has more buyers from Estonia than suitable properties for them.

According to him, Estonians buying real estate in the more affordable price range primarily do so for rental purposes or in hopes of selling it later at a higher price. Buyers of more expensive properties more often consider multiple options: using the home themselves, renting it out, selling it, or exchanging it for a larger property in the future. The desire to hold part of one's assets outside the European Union also plays a role in the purchase decision.

According to Skorik, Dubai's rental yield compared to Estonia still provides many investors with a strong argument. In his assessment, for a Tallinn new development apartment costing about 300,000 euros, one can ask for rent of 1,000–1,200 euros per month, while for a Dubai apartment at the same price, approximately 2,000 euros.

The war affected the rental market more severely than the sales market. Air traffic decreased, tourists did not come, and apartments that had been in short-term rental moved to long-term rental. „The owner had to realize that to rent out an apartment, a 10-25% discount had to be offered," said Skorik. By autumn, people had returned to the city and advertisement prices had reached near pre-conflict levels, according to him.

According to Kinnisvara24 managing director Urmas Uibomäe, the United Arab Emirates is currently the largest destination by the number of foreign real estate listings on the portal, followed by Spain and Turkey. According to queries, Spain ranks first, especially Costa Blanca and Torrevieja, but interest in Dubai real estate has not diminished.

„Kinnisvara24 currently has 229 active Dubai real estate offers. The selection includes apartments of various sizes, townhouses, and villas. Dubai does not mean only luxury real estate in the millions of euros, as the selection also includes properties under 200,000 euros," said Uibomäe.

A large portion of the listings consist of new developments and projects in the final stages of completion. According to Skorik, in developing areas, one-bedroom apartments with open floor plans under construction can usually be purchased for 150,000–170,000 euros, and one-bedroom apartments, or in Estonian terms, two-room apartments, start at approximately 250,000 euros. Such projects typically take two to three years to complete and the purchase amount is paid in installments.

According to Uibomäe, Kinnisvara24 sees the most interest in foreign listings for properties under 200,000 euros. „Spain remains firmly in focus, but this year, Italy, Turkey, Portugal, and Latvia have also stood out more in searches. However, Dubai is still one of those destinations whose listings Estonian buyers follow," he added.

In 2024, Kinnisvara24 opened a separate page as the first domestic real estate portal where one can buy, sell, and rent foreign real estate owned by or brokered for Estonian people and companies.