Dubai scrambles to save its reputation as haven for rich

A version of this article originally appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to high-net-worth investors and consumers. become a member to receive future editions straight to your inbox.

The Iran war has shaken Dubai’s status as a global center of wealth; Legions of expatriates are scrambling to escape, family offices and asset managers are reassessing their footprint in the Middle East.

Over the past decade, Dubai in the United Arab Emirates has successfully marketed itself as a safe haven for the global elite. It’s sunny, safe and largely tax-free. The ever-increasing supply of luxury villas, apartment towers and amenities available to the 1% have made Dubai the perfect playground for carefree wealth.

But now Dubai’s reputation for security is in tatters.

An explosion occurred at the five-star Fairmont The Palm Hotel, located in Dubai’s famous man-made, palm-shaped archipelago. Remnants of a crashed Iranian drone set fire to the Burj Al Arab hotel and Dubai airport was damaged by a missile attack. On Tuesday, the US Consulate in Dubai was targeted by a suspicious drone strike and a fire broke out nearby.

“The US-Israeli war on Iran is disrupting the critical security climate in Dubai,” said Jim Krane of Rice University’s Baker Institute. “Dubai’s economic model relies on expatriates providing brains, muscle and investment capital. To bring in smart foreigners, you need stability and security.”

Dubai and the United Arab Emirates quickly sought to reassure investors and downplay the violence. The UAE’s National Emergency Crisis and Disaster Management Authority announced on Saturday that “the situation is under control”. Dubai police this week threatened to arrest and imprison social media influencers who share social content that “contradicts official announcements or may cause social panic.”

Other centers of wealth in the region, including Abu Dhabi, Doha and Riyadh, also suffered the effects of the war. Like Dubai, they have made attracting the wealthy a key economic policy. However, the rise of Dubai and its dependence on wealth capital stands out in the region. That’s because Dubai no longer relies on oil revenues like its neighbors, but on the trust of foreigners, Kane said.

“The city cannot function if everyone with a foreign passport runs away,” he said. “Dubai will literally shut down. Dubai becomes more exposed to the risks of foreign migration.”

Dubai is currently home to 81,200 millionaires, 237 centimillionaires (those with a fortune of $100 million or more) and at least 20 billionaires, according to Henley & Partners. An estimated 9,800 millionaires were expected to move to Dubai in 2025 and 2026, according to Henley, with demand mostly coming from the UK, China and other parts of Asia. As the ruling Maktoum family began diversifying the economy away from oil decades ago, Dubai created special economic zones and golden visa programs to effectively industrialize its wealth appeal as a national strategy.

There is no personal income tax, capital gains tax and inheritance tax in Dubai; This makes it ideal for the ultra-rich and family offices. The Dubai International Financial Center (a special economic zone) reported in early January that the top 120 families in the economic zone managed a combined total of more than $1.2 trillion. Last month the DIFC said it was home to 1,289 “family-related organisations”, up 61% on a year ago.

For now, many wealthy families and wealth professionals are focused on getting out. Charter companies report that demand for private jets far exceeds the number of seats and flights available. Vimana Private Jets CEO Ameerh Naran said on Tuesday that the broker received more than 100 customer inquiries overnight. He said he hasn’t seen such a demand since the pandemic. A jet from Riyadh to Europe can cost up to $350,000, he said.

He added that the Dubai residents he spoke to were traveling for business meetings, not to escape to safety.

“They don’t feel safe,” he said. “Normally life was just a little extra background noise with all these missiles. But life has to go on. They have to travel.”

Dale Buckner, CEO of security firm Global Guardian and a former Green Beret, said migration shows no signs of slowing down. As of Tuesday morning, Buckner had seven corporate clients, including major financial and consulting forms, looking to lay off 1,000 to 3,000 employees.

“This place is very similar to Ukraine,” he said.

“I think everyone has realized that the Iranians have successfully targeted five-star hotels and airports on a large scale, and now they’re starting to shut down the oil infrastructure,” he said. “I don’t believe anyone thought this was possible.”

Many companies and professionals in Dubai said the business community has a strong chance of staying. And they are careful not to confront the government in times of crisis. Hedge funds and family offices are mainly attracted by Dubai’s tax, regulatory and stable banking regimes, said Hasnain Malik, who leads emerging markets equity and geopolitical strategy at Dubai-based Tellimer. All of those qualities remain in place, he said.

“Those reasons have not changed,” he said. “Recent events have called into question just one aspect of the way of life: pristine security.”

Henley & Partners, which helps the wealthy obtain visas in other countries, said Dubai had always proven resilient in times of uncertainty. Dominic Volek, group head of private clients at Henley & Partners, said the attacks in Dubai were also a reminder of the importance of hedging geo-risk.

“Situations like this reinforce a core principle we often discuss with our customers: the value of global optionality,” he said. “Internationally mobile families often diversify their residency and citizenship rights across multiple regions, including the Americas, Europe, the Middle East, and Asia, thus remaining resilient in the face of geopolitical uncertainty, wherever and whenever it arises. These decisions are often strategic and long-term in nature rather than responses to short-term events.”

One sector that may feel long-term pressure is the Dubai real estate market. Dubai’s real estate prices have been rising for five years straight, fueled by the golden visa program that gives foreigners 10-year renewable visas to buy property worth $550,000 or more. Last year, the 47,200 square meter penthouse at the new Bugatti Residences sold for AED 550, or approximately $150 million, setting a price record for Dubai and the UAE.

But even before the Iran war, there were some signs that Dubai’s dizzying construction frenzy, rising prices and rampant speculation might be cooling down. In September, UBS estimated that Dubai had the fifth highest bubble risk among 21 major cities, behind Zurich and Los Angeles. In the spring, Fitch Ratings predicted a correction in late 2025 and 2026, with prices falling as much as 15%.

Fitch Ratings’ Anton Lopatin said the impact on property values ​​would depend on the scope and duration of the dispute. For now, he said, the departure of foreigners could “put pressure” on Dubai’s housing market.