The repercussions of the war on Iran have spread to the real estate sector in the world through more complex channels, primarily rising energy prices, tightening financing conditions, widening risk premiums, and slowing down long-term investment decisions.
Estimates issued by investment and credit rating institutions show that the most important impact on real estate comes from the reflection of the geopolitical shock on inflation, interest rates, credit and liquidity.
Read also
list of 3 itemsend of list
In this context, LaSalle Investment Management – a global company operating in 13 countries around the world – believes that the main channel for the war to spread to real estate passes through energy markets, because any disruption in supplies raises inflation, delays interest cuts, and increases the required return on long-term assets, which puts pressure on real estate valuations and debt-financed deals.
The company estimates, citing Capital Economics, that an increase in oil prices by 10% to 15% adds about 0.2 to 0.3 percentage points to inflation in advanced economies, which means that the real estate sector is facing an indirect but widespread shock.
Oil and interest shock
The sensitivity of real estate to this war lies in the fact that the sector is highly dependent on the cost of borrowing, whether for individual buyers, developers, or real estate funds. In the United States, Freddie Mac (Federal Residential Mortgage Corporation) data showed that the average thirty-year fixed mortgage interest rate reached 6.30% on April 16, 2026, after it had fallen to 5.98% on February 26, before geopolitical fluctuations returned to raise returns and then push them to fluctuate again.
Existing home sales also declined in March by 3.6% on a monthly basis, an indication that housing demand remains sensitive to any increase in financing or decline in consumer confidence.
Data from Realtor.com (the most prominent real estate website in the United States) confirm that the American market was essentially heading toward a slower balance before the war, with the active inventory of homes for sale increasing by 8.1% on an annual basis in March, and the median price of residential listings declining by 2.2%, reflecting a slowdown in price momentum.
But any new wave of rising oil or revenues may delay this balance, because its impact is not limited to mortgages, but extends to the costs of living, energy, and insurance, which are elements that put direct pressure on families’ ability to purchase.
From a broader angle, the United States does not appear to be in the same position of fragility as Europe or Asia, by virtue of being a major energy producer, but that does not negate the impact of the war on American real estate. Jones Lang LaSalle indicated, through its CEO Christian Ulbrich, that the war fuels uncertainty in investment and affects decisions to sign leases and long-term commitments, because the real estate investor needs a greater degree of clarity of vision before pumping money into projects that require years to mature.
Geographic disparity
Outside the United States, the differences are clearer. LaSalle Investment Management Company indicates that Europe and Asia are more exposed to an energy shock due to their greater dependence on imports, while International Energy Agency data show that the bulk of the oil crossing the Strait of Hormuz is heading to Asia, and that Japan and South Korea are among the economies most dependent on this path.
The agency estimates that about 15 million barrels per day of crude, or about 34% of global crude trade, passed through the Strait in 2025, while only a limited share goes to Europe compared to Asia. This means that any prolonged disruption raises the cost of energy in importing economies, puts pressure on household income and corporate margins, and thus on residential and commercial real estate demand.
In Asia specifically, the risks take on a double dimension, because the war not only raises the import bill, but also threatens supply chains and industrial activity, which is reflected in industrial, logistical and office real estate, and not just housing.
Also, the economies most dependent on Middle Eastern crude may find themselves facing new inflationary pressures that delay monetary easing and prolong the period of high interest rates, which puts pressure on real estate valuations and postpones major deals.
In Europe, the war began to put pressure on broader economic confidence, as the ZEW investor confidence index in Germany fell in April to its lowest level in more than three years, with escalating fears of energy shortages and rising production costs.
Although this indicator does not measure real estate directly, it is important because the decline in confidence and the increase in industrial and financial risks are usually transmitted to real estate investment decisions, especially in the commercial, office, and logistical sectors related to the business cycle.
Trust test
In the Arab world, the scene is different, as the risks in the Gulf countries do not come from rising energy, because producing countries may benefit financially from rising prices, but rather from investors reevaluating the concept of a “safe haven” in the region. Reuters described the UAE real estate market as facing its first real test after years of boom, with growing concern over Dubai and Abu Dhabi’s reliance on foreign capital flows to support real estate development activity.
The Fitch report also warned that commercial real estate financing may become the most prominent source of deterioration in asset quality for UAE banks in the negative scenario, indicating that commercial real estate constituted 13% of total loans by the end of 2025, with higher concentrations in some banks.
Fitch believes that the slowdown in economic activity, the decline in tourism, and weak population growth may impose pressure on residential and commercial real estate in the Emirates, above the price correction that the agency had expected before the war. It also believes that the decline in business volumes, the increase in allocations, and the erosion of some capital margins may transform real estate from an engine of growth into a point of pressure on bank budgets, if the conflict is prolonged or its regional effects expand.
In contrast to this stressful path, war does not necessarily mean a general real estate collapse, as “LaSalle” believes that real estate, compared to some nominal financial assets, has the ability to compensate for rising prices by increasing revenues, whether through lease contracts or through high replacement costs, which helps protect the real return over time. But at the same time, she stresses that this does not eliminate the necessity of testing real estate portfolios on scenarios with higher interest rates, broader risk premiums, and longer periods of energy disruption.
In an interview with Al Jazeera Net, Professor of Economics and International Relations, Kamil Al-Sari, believes that the repercussions of the war on global real estate will vary from one region to another, because the basic relationship passes through interest, energy, and growth.
He points out that Europe and the United States face a clear dilemma, which is that rising energy prices raise inflation and weaken the chances of lowering interest rates, which increases the cost of real estate financing and puts pressure on demand. In non-oil Arab countries, the impact appears through the deterioration of purchasing power and the exacerbation of budget burdens and debt, which has a negative impact on housing purchases and real estate investment.
Al-Sari adds that the Gulf countries face a different type of risk, not only related to interest or energy prices, but also to the confidence of foreign investors and the possibility of some of them reluctance to pump new money or even temporarily redirect their investments to less tense destinations.
In his opinion, this pressure may be more pronounced in the UAE due to the large weight of foreign capital in its real estate market, but it remains a circumstantial effect and not necessarily a permanent path, because the return of political and security stability may restore flows again.
Al-Sari also links Asian real estate and war through the global growth channel, explaining that Asian economies, even if some of them possess oil reserves or financial margins, remain vulnerable to a broader slowdown if the energy shock continues, trade is choked, and production and transportation costs rise. This would exacerbate the pressures on real estate demand, especially in markets that already suffer from fragility in the real estate sector or a slowdown in export and industrial activity.
