The stakes for the global financial community are particularly high in the UAE, which has attracted international billionaires looking to safeguard their wealth as well as Wall Street banks and hedge funds looking to expand. Abu Dhabi has been on a dealmaking spree with its $1.7 trillion sovereign wealth pile. Meanwhile, Dubai’s property prices have surged 70% over four years propelled by buyers from around the world.
“I think the current situation is contained. But what happened is significant — it’s a signal that no action is off-limits anymore,” said Hussein Nasser-Eddin, chief executive of Dubai-based security services provider Crownox, referring to the attack in Qatar, which like the UAE is a long-time ally of the US.
Nasser-Eddin said his firm — which provides travel security, protective and risk advisory services — has seen a rise in contingency planning requests in the Gulf in the last couple days. Companies have asked for details of Crownox’s cross-border capabilities, essentially wanting to know if it could “save the day” if things went wrong, he said.
Even such lingering concerns haven’t been enough to deter those investing or living in the UAE. More than a dozen bankers, hedge fund and sovereign wealth fund executives interviewed by Bloomberg News said they haven’t seen signs of capital flight or firms considering a pullback. They asked not be named because they weren’t authorized to speak to the media.
UAE stocks, which sank at the outbreak of the Israeli strikes on Iran, have not just recouped those losses but scaled new highs in tandem with US stocks. Dubai’s equity benchmark is trading almost 3% higher than before the conflict, reaching the highest level since the 2008 global financial crisis. Abu Dhabi’s index has added more than 1% and is at the highest since January. Both indexes are rising faster than the global benchmark MSCI ACWI.
“I believe that the safe-haven status will continue, the macro story remains robust and the reform program compelling. We continue to expect capital and population inflows in the medium-term,” Monica Malik, chief economist at Abu Dhabi Commercial Bank PJSC, said about the UAE. “The fact that there were no economic disruptions and the ceasefire are positive.”
Historically, Dubai has benefitted from periods of unrest not just regionally but elsewhere too. Most recently, after the invasion of Ukraine in 2022, some Russians bought Dubai real estate. Property prices have been shooting up since the pandemic. Still, the emirate’s population is largely made of expatriates and any pullback from them would also dent the housing market, which makes up more than a third of the city’s gross domestic product.
“We had a period of 48 hours where buyers were reluctant to pull the trigger,” said Myles Bush, chairman of brokerage Phoenix Homes. “However, now it’s business as usual and buyer confidence has bounced back.”
While market sentiment hasn’t been affected so far, a resumption of hostilities may shake confidence, said Anna Kirichenko, a property broker who has worked in Dubai since 2007.
There is also the potential for other economic fallout. Despite airspace closures ending and the ceasefire, several global airlines are still avoiding Dubai to ensure the safety of crew and passengers amid geopolitical tensions. Among them are Singapore Airlines, Air India Ltd. and United Airlines Holdings Inc. The aviation sector supported 27% of Dubai’s GDP in 2023, according to a report by Emirates, contributing nearly $40 billion to the city’s economy.
Dubai and Abu Dhabi have in recent years attracted expatriates and financial firms partly because of the UAE’s easy visa policies, low taxes and convenient time zone between East and West. The regulator for Dubai’s financial center said it had contacted a number of firms, who reported normal business activity.
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