WHAT happens to a city built on a single promise that people and capital will always keep arriving? Then one day the music stops. A vacant apartment you own is not an investment. It is a monthly bill. That is the quiet terror creeping through many people I have spoken to who own property in Dubai. The fear is working its way through every tower, every bank and every balance sheet in the city. It is being felt not only by those who own residential property but more acutely by owners of commercial property — shops, offices and hotels. The unasked question on everybody’s mind is: how much longer does this go on?
Abu Dhabi can wait. Even with the Strait of Hormuz throttled, the emirate has enough reserves and sovereign wealth to cover salaries, subsidies and imports. Simply put, the UAE’s capital can absorb a long disruption without serious difficulty.
Dubai cannot.
The issue is not with Dubai’s core government spending which runs at roughly $2 billion dollars a month. While there has been a sharp fall in the emirate’s revenues from property registrations and the Jebel Ali Free Zone (JAFZA), that amount of expenditure is manageable. The real vulnerability lies beneath — in the four engines that drive Dubai’s non-oil economy. All four are now under stress.
The four engines that drive Dubai’s economy are under stress.
First, real estate. For 20 years, the promise was simple: buy an apartment, rent it out, sell it later for more. That worked as long as people kept arriving. The machine ran on two quiet pillars: the hope of rising prices and the steady drip of rental income. Today, the second pillar is crumbling. More people are leaving than arriving. Companies are quietly scaling back or relocating. “If your tenant leaves,” a landlord told me, “finding a new one will not be easy. And you will be faced with paying service charges, maintenance fees, utilities — with no rental income in sight.”
“Most of the real estate here is owned by people who don’t live here,” one realtor told me. “So they look for tenants. Tenants come for jobs. Both are in short supply.”
What was sold as a robust asset class now looks like a growth-dependent bubble. For millions of expats and investors, property in Dubai is the primary store of value — where life savings and retirement funds are parked. Those with no mortgages are trying to get their money out. But there are few buyers. When a landlord cannot find a buyer nor a tenant, they will look for a distress sale. That is how a slow leak becomes a flood.
Meanwhile, another class of investors, punters and speculators have moved in. They are buying unfinished off-plan apartments on bargain deals which are several months away from completion and which they expect to flip for a profit.
Dubai’s second engine is the trade and transhipment model centred around JAFZA. Even if the Strait of Hormuz eventually reopens, many of the 11,000 companies whose business depends on reliable passage through contested waters are quietly re-evaluating their exposure. Some are already looking at alternative locations outside the Gulf — Oman, Saudi Arabia and beyond. Once supply chains move, they rarely come back.
The third engine is hotels and hospitality. Dubai has over 140,000 hotel rooms for 18 million tourists who arrive each year. Most are empty. Even when the conflict ends, the emirate will face massive excess capacity.
Dubai’s fourth engine is the conferences, exhibitions and shopping tourism. These events are planned months or years in advance. The current uncertainty has already led some organisers to explore safer venues in Riyadh, Kuala Lumpur or Istanbul. Others have cancelled, in the face of high logistical costs this year. The loss here ripples directly into retail and hospitality jobs.
What about the banks? UAE banks look strong on paper, with high capital ratios. But they have quietly started setting aside more money for loans that may never be repaid — always a bad sign. Many have stopped lending. More tellingly, Dubai’s biggest bank recently raised expensive emergency funds from international investors. And the Central Bank has been quietly asking Washington for emergency dollar access. Officials call it precautionary. But in normal times, you do not ask.
Abu Dhabi has wealth in the ground and in the bank. And it has a vision to build a hydrogen economy on the back of ample sunshine, where it sees green hydrogen replacing fossil fuels by 2050. Dubai has a model built on a single unspoken assumption: that the tide of people and capital would always flow inward. Every tower, every free zone, every hotel room was built on the belief in unbroken stability. Now something fundamental has shifted: the region finds itself inside a live conflict zone. The core assumption that underpinned Dubai’s entire economic model has been challenged — perhaps permanently.
The writer is author of the novel Dubai: The Fall.
Published in Dawn, June 3rd, 2026