Expats boosted Dubai's 70% property rally, now Trump's tariffs threaten to undo all gains

Over the last four years, Dubai property prices have surged 70% and outperformed other major cities. That relentless boom now faces its biggest threat since the pandemic as US President Donald Trump’s tariffs roil markets.

The outlook for oil producing Gulf economies has dimmed, with crude plunging below $65 a barrel on the back of the trade tensions and a decision by OPEC+ to boost supply. Meanwhile, the uncertainties that have hit asset prices from India to China and the UK risk deterring the wealthy foreign buyers who’ve been snapping up Dubai real estate.

Property prices in the emirate had already begun moderating in recent months, with last year’s 16% rise less than the 20% of the previous year as buyers started to push back on big increases.

The risks of a bigger real estate slowdown in Dubai are now piling up, analysts say. A regional economic pullback due to crude’s decline would result in fewer jobs for the expats who’ve helped boost the property market, according to Mohammed Ali Yasin, founder and chief executive officer of Oracle Financial Consultancy and Investments.

At the same time, high levels of international investment in Dubai’s real estate market leave it vulnerable to the downturn in global assets, said Taimur Khan, the head of research in Middle East and Africa for real estate services firm JLL.

“There is a question as to whether international groups that might be facing more uncertainty in their home markets could want to follow through with investments here,” Khan said.

The fortunes of the emirate’s property market have long been tied to crude, with prices falling in early 2020 and 2014 in tandem with oil. Average home prices in Dubai fell around 33% between 2014 and 2020 after oil prices collapsed and curtailed state revenues.

Trump has paused most of the tariffs he announced earlier this month. But he’s levied a 145% rate on China, which is the biggest buyer of Middle Eastern oil.

“People are under estimating the impact of slower growth in China and in turn lower demand for oil on our markets,” said Yasin, who’s based in Abu Dhabi. “Government spending and projects would be most impacted if oil prices stay close to $60 per barrel and that will have an impact on jobs and lower economic activity, in the long term,” he said.

Goldman Sachs Group Inc. has warned that neighboring Saudi Arabia may see its budget deficit soar to $67 billion this year and cut spending on a multitrillion-dollar plan to transform the economy.

The outlook for Saudi Arabia impacts Dubai because many firms are headquartered in the emirate and use it as a springboard into the kingdom. So cuts to construction projects in Saudi Arabia are likely to impact hiring and jobs in Dubai as well.

Residential values in Dubai jumped 69.8% between November 2020 and December 2024, according to the researcher Knight Frank. The rally was fueled by the government’s handling of the pandemic and its liberal visa policies. Wealthy investors, from Russians seeking to safeguard assets to crypto millionaires, have rushed in.

For now, developers say they are still selling briskly. Muhammad Binghatti, the chairman of the privately-owned developer Binghatti Properties, said the company managed to complete all planned sales during the volatility of the past week.

Also, Louis Harding, the chief executive of Dubai broker Betterhomes, said oil prices may not have the same impact as earlier years because the emirate now has measures like long-term golden visas that encourage expats to stay on even during downturns.

For now, weakness in the greenback is also an advantage to foreign buyers because Gulf currencies are pegged to the US currency. The Bloomberg Dollar Spot Index tumbled 2.4% last week and the gauge is at the lowest level since October.

Dubai’s biggest developer Emaar Properties PJSC is down more than 10% since the tariffs were announced on April 2, while rival Aldar has lost more than 5% amid the market turmoil. Both stocks remain up around 40% for the past year.

Other pressures could yet come into play. Potential currency devaluations by any countries looking to balance out the tariffs would also put Gulf countries at a potential disadvantage, Khan said.

“There are a lot of known unknowns,” Khan said.