Israeli-US war batters UAE economy, wiping $120bn from Abu Dhabi, Dubai markets

(AFP) Off The United Arab Emirates (UAE) is facing its most serious economic shock in decades, as the Israeli-US war on Iran delivers a direct hit to its core industries, from finance to aviation, exposing major vulnerabilities in its economic model. More than 120bn has been wiped from market capitalisation on the Dubai and Abu Dhabi stock exchanges in the last month, while over 18,400 flights have been cancelled. The Dubai index has been hit hardest, plunging 16 percent since the war began on 28 February , more than double the decline seen in Abu Dhabi. The UAE President, Sheikh Mohamed bin Zayed Al Nahyan, and Dubai Crown Prince, Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, have tried to put a brave face on their country’s economic woes - with publicity trips to Dubai Mall. Analysis compiled by Middle East Eye from publicly available information indicates that it will take more than a few trips to the mall to salvage the UAE’s economy under any post-war scenario. Unlike Saudi Arabia and Oman, whose stock markets have risen on the back of higher oil prices, the UAE’s globalised economic model, built on tourism, real estate, logistics and finance, has taken a direct hit and laid bare the country’s vulnerable model. By March 28, Iran had launched 398 ballistic missiles, 1,872 drones and 15 cruise missiles at the UAE, making it the most targeted country after its close ally Israel. While most were intercepted, debris still caused damage in Abu Dhabi and Dubai, including at the Burj Al Arab, Palm Jumeirah, Dubai airport and the Fujairah oil industrial zone. Real estate sector “Brand Dubai”, long used to project the UAE as something beyond oil, has taken a particularly significant blow. One of its crown jewels, the property market, is now under severe pressure. The UK-based consultancy Savills described Dubai as “one of the most dynamic property markets in the world” as recently as late 2025, when transactions exceeded 147bn. That momentum has now reversed sharply. By the end of March, Dubai’s real estate index had fallen by at least 16 percent. Goldman Sachs analysts estimate transactions have dropped 37 percent year-on-year, while sales have plunged by more than 50 percent compared with February 2026. Reuters reports that some properties are now being sold at discounts of 10 to 15 percent by those seeking a rapid exit. Shares in developers such as Emaar Properties, which is behind the Burj Khalifa, have fallen by more than 25 percent. The war has also introduced “considerable risk” to Dubai’s future population growth, according to Citi, which now expects growth of just 1 percent this year and around 2 percent annually through 2031, well below the recent 4 percent trend. Turning on foreign residents? The UAE, and Dubai in particular, has driven retail growth across the Middle East region, accounting for around half of all luxury goods sales in the Middle East, according to Morgan Stanley. That demand depends heavily on tourism. More than 20 million international visitors arrived in Dubai in 2025. For two decades, Dubai and Abu Dhabi sold themselves as islands of stability in a volatile region, attracting investors, tourists and foreign residents alike. Now, that model is creaking as the war enters its second month. There are growing signs of a clampdown on foreign residents. In an apparent attempt to control the narrative, reports suggest Dubai has arrested at least 70 UK nationals for filming Iranian attacks, a move that risks further damaging its global image. UAE has an active role in Iran war and will be pounded if US invades, Iranian sources say Read More » Authorities have warned that sharing such footage could lead to fines exceeding 260,000 and prison sentences of up to 10 years. At least 11 people have been killed and more than 179 people have been injured from more than 29 nationalities. At the same time, the UAE’s aviation sector, a cornerstone of its economy, has taken a direct hit. Dubai International Airport, one of the world’s busiest, handling around 95 million passengers annually, suffered damage in Iranian strikes and shut down completely on March 1. In a single day, more than 3,400 flights were cancelled across Dubai, Al Maktoum, Abu Dhabi and Sharjah. Emirates and Etihad suspended operations, with losses expected to run into the billions. Hotel bookings have collapsed, prices have been slashed, and wealthy expatriates have reportedly paid up to 250,000 for private evacuation flights. Dubai remains heavily reliant on European visitors, who account for more than 20 percent of tourists, and are now unlikely to return in the near term. War on Iran News Post Date Override 0 Update Date Mon, 05/04/2020 - 21:19 Update Date Override 0