For years, Dubai has built an image of an oasis of stability in the volatile region of the Middle East. The second richest emirate of the United Arab Emirates positioned itself as a safe financial center where high-ranking individuals could invest capital, run businesses and plan long-term with a sense of security, writes Deutsche Welle.
But that carefully built image was shaken by the war with Iran. Iran’s missile and drone attacks on targets in the Gulf caused a strong economic shock – the stock markets in Dubai and neighboring Abu Dhabi lost about 120 billion dollars in value in a short period of time. At the same time, tourism has sunk: hotel occupancy has fallen to around 20 percent, down from the usual 70 to 80 percent, while air traffic to and from Dubai Airport is down by nearly two-thirds, according to data from London-based analyst firm Capital Economics.
Although air traffic, tourism and business arrivals began to recover after the (temporary) ceasefire, Iran’s new drone attack on the Fujairah oil complex was a reminder that the prolonging conflict between Washington and Tehran poses a growing threat to Dubai’s reputation as a global business hub.
Safe haven status in question
Part of the wealthy individuals who accepted Dubai as the “playground” of the rich and famous are now questioning whether the emirate is really the safe haven it has been made out to be. Many have already diverted part of their assets to the other two leading financial centers – Singapore and Switzerland.
Wealth management advisers in both countries are reporting a sharp increase in inquiries from Dubai-based clients, while Swiss private bankers are expecting an influx of tens of billions of dollars from the Gulf. However, these centers are not necessarily competitors, he explains Ryan Linlawyer and director of the Singapore law firm Bayfront Law.
“Switzerland attracts more European and global clients, while Singapore primarily serves Asian capital,” Lin told DW.
Singapore has already developed a model that Dubai later followed – a sophisticated ecosystem for the so-called family offices, private structures for managing investments, taxes and inheritance. These solutions are particularly attractive to families from China, India and Indonesia.
Switzerland, on the other hand, relies on a long tradition of private banking and a reputation for political neutrality. According to To Till Christian Budelmannchief investment officer of the Swiss private bank Bergos, the decision to reallocate assets often boils down to “a choice between growth and preservation.”
“Singapore is great for profiting from Asian growth, but Switzerland remains the world’s leading anchor for capital preservation,” Budelmann said, adding that the Alpine country offers “a level of distance from geopolitical hotspots that Singapore cannot always guarantee.”
Cooling of the real estate market
Beyond the immediate downturn, the conflict threatens Dubai’s long-term appeal to expats and businesses. The cosmopolitan lifestyle was key to the booming property market – luxury villa prices almost doubled between the coronavirus pandemic and the end of 2024.
Now the concern is growing. The total value of housing transactions in March fell almost 20 percent compared to the previous month, to about $10.1 billion, Bloomberg reported. Forecasts by Citi Research and consulting firm Knight Frank point to a possible price correction of 7 to 15 percent.
Despite the Iranian attacks, most of the wealthiest individuals are not leaving Dubai entirely, but are opting to diversify. Budelmann describes this as “strategic hybridity”: clients keep operational businesses and part of their lifestyle in the UAE, but move long-term assets to Singapore or Switzerland, often with the establishment of a second “base”.
Economic momentum pending
About a fifth of Lin’s Dubai-based clients plan to stay, seeing the instability as temporary while efforts to reopen the Strait of Hormuz continue. For many others, presence in another country becomes a kind of (and necessary) insurance policy.
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Before the outbreak of war, Dubai’s economy was experiencing strong growth – in the first nine months of 2025, GDP growth of around 4.7 percent was recorded. A record 9,800 millionaires moved to Dubai last year, bringing with them an estimated $63 billion in new wealth, according to data from consulting firm Henley & Partners.
The emirate offers a zero rate of income tax, no capital gains or inheritance tax, while the profit tax is only 9 percent for profits above 100 thousand dollars. Companies in free zones pay no tax at all on qualified income.
Popular for a reason
From a humble desert settlement, Dubai has pushed the boundaries of innovation and engineering over the past 50 years. Analysts believe that if the truce holds and trust is quickly restored, the city could make a sharp recovery. They warn against prematurely writing off the home of the tallest building in the world, the Burj Khalifa, and a number of other projects that have become global symbols.
Ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoumeven before the war, initiated plans to turn the new Dubai airport into the world’s largest aviation hub and to double the economic volume by 2033. Among the announced megaprojects are the 93-kilometer long climate-controlled pedestrian path “The Loop”, the largest artificial coral reef system in the world with more than a billion corals, and the futuristic resort Artificial Moon.
Although many wealthy investors today invest with caution, a complete departure from Dubai for many would mean giving up an exciting, cosmopolitan life in the middle of the desert, he writes. Deutsche Welle.
