### The UAE’s Resilience Amid Global Instability
The United Arab Emirates (UAE) has showcased remarkable resilience during times of global turmoil. In the past, it attracted capital during the upheaval of the Arab Spring, swiftly reopened amidst the pandemic, and has seen a notable influx of Russian investments following Moscow’s invasion of Ukraine. This adaptability has positioned the UAE as a vital player in the global financial arena.
### A Test of Neutrality
The ongoing confrontation between Iran and Israel, which has drawn involvement from the US, poses a significant challenge to the UAE’s well-established neutral and business-friendly reputation. Just recently, tensions intensified when Iran launched an attack on a US base in Qatar, prompting the UAE to momentarily close its airspace. Despite this immediate crisis, life in the bustling financial hubs of Dubai and Abu Dhabi quickly reverted to normal.
### Business Resilience
An executive from one of Abu Dhabi’s leading wealth funds relayed a sense of determination, stating that deal-making and investments were proceeding as planned. The atmosphere was one of optimism, with bankers in Dubai expressing confidence that the UAE would navigate any potential fallout from the situation. Even amidst a ceasefire brokered by former US President Trump, there remains an undercurrent of unease, as executives acknowledge the heightened geopolitical risks in the region.
### High Stakes for Global Finance
The stakes are particularly high in the UAE, which has become a sanctuary for global billionaires eager to protect their wealth. Wall Street banks and hedge funds are drawn to the region, with Abu Dhabi enjoying a surge of activity fueled by its $1.7 trillion sovereign wealth fund. Meanwhile, property prices in Dubai have skyrocketed by 70% over the past four years, with buyers from around the globe seeking opportunities in the real estate market.
### The Signal of Potential Turmoil
As noted by Hussein Nasser-Eddin, CEO of Dubai-based Crownox, the recent attack on a US base signals that no action can be deemed off-limits anymore. His company has experienced an uptick in requests for contingency planning in light of the evolving security landscape. Despite these concerns, investment and living in the UAE have not slowed, according to numerous bankers and financial executives interviewed.
### Stock Market Resilience
Stocks in the UAE, which initially sank following the onset of hostilities, have not only recovered but also reached unprecedented heights. The Dubai equity benchmark reported an increase of nearly 3%, surpassing pre-conflict levels and achieving the highest status since the 2008 financial crisis. Similarly, the Abu Dhabi index has risen by more than 1%, indicating strong market confidence amidst global geopolitical tensions.
### Continued Prospects
Monica Malik, chief economist at Abu Dhabi Commercial Bank, expressed a robust outlook for the UAE, emphasizing its safe-haven status and compelling reform programs. She predicts continued capital and population inflows, noting that the situation remains stable and economic disruptions have been minimal.
### Dubai’s Historical Advantage
Historically, Dubai has thrived in times of unrest both regionally and internationally. Following the 2022 invasion of Ukraine, many Russians turned to Dubai for real estate investments, driving prices upward post-pandemic. Yet, as the population primarily consists of expatriates, any significant withdrawal could have repercussions on the housing market, a sector that constitutes over a third of the city’s GDP.
### Market Sentiment Stabilizes
Myles Bush, chairman of brokerage Phoenix Homes, observed a brief hesitance among buyers, but confidence quickly rebounded. Although market sentiment remains optimistic, volatility remains a possibility. Anna Kirichenko, a property broker with extensive experience in Dubai, noted that further hostilities could impact confidence significantly.
### Aviation Sector Vulnerabilities
Despite the reopening of airspace and a truce, major airlines like Singapore Airlines and Air India are still wary, choosing to avoid Dubai to ensure passenger safety amidst the ongoing geopolitical tensions. This aspect is especially concerning given that the aviation sector accounted for 27% of Dubai’s GDP in 2023, contributing nearly $40 billion to the economy.
### Attracting Global Talent and Investment
The UAE’s liberal visa policies, low tax rates, and strategic time zone have made it an attractive destination for expatriates and financial firms in recent years. The financial regulator in Dubai has been in contact with various firms, confirming that business activities have remained largely unaffected.
### Geopolitical Risks Loom
Conversely, risks linger. Although a ceasefire is in place, instances of ceasefire breaches have been reported, prompting US warnings. Intelligence assessments indicate that American airstrikes may not have significantly impacted Iran’s nuclear ambitions, potentially keeping tensions alive.
### Managing Crisis from Behind the Scenes
Nonetheless, the Iranian attack was perceived as somewhat controlled, suggesting effective crisis management from Gulf officials. This sentiment has provided a degree of reassurance among financial executives, particularly since the UAE, home to US military personnel, was not directly impacted.
### Viewing Opportunity Amidst Turbulence
Veteran Wall Street dealmaker Ken Moelis characterized the current regional turbulence as an opportunity for optimism and growth in the Gulf. He emphasized the potential benefits associated with unlocking Iranian oil reserves and opening labor markets if sanctions are lifted. The prospect of millions of educated and motivated Iranians entering the market is a topic of optimism among those in the financial sphere.
