Dubai Property No Longer Safe Haven

Dawn

Dubai, once seen as a safe destination for illicit money from Pakistan, is losing its appeal amid the ongoing US-Gulf war with Iran. Property and currency market sources say the flow of illegal money from Pakistan to Dubai has declined, while some funds previously invested there are returning to Pakistan. “Around $60 million in illegal (or black) money was generated in Pakistan every month and it used to be invested in Dubai, but now it has stopped,” said Hasan Bakhshi, chairman of the All Pakistan Builders Association.

Thousands of Pakistanis have invested billions of dollars in Dubai, particularly in its property market. Pakistan has twice been identified as the second-largest foreign investor in Dubai’s property sector. Currency traders say the conflict has made it harder to recover money held in Dubai. “The high remittances from Dubai mean that Pakistanis are sending their liquid assets back to Pakistan,” said a currency trader.

The war has also reduced Dubai’s appeal as an investment and tourism destination. At the same time, newly generated illicit money in Pakistan is again flowing into the local property market. “Since the Gulf War, property prices in the defence sector have increased by 50 to 60 percent,” said Mr. Bakhshi. “Since the ownership of defence assets is secure, meaning there is no risk of multiple deeds or fraudulent transactions for the same property, most of the money is going to that area.”

Several technology companies and Pakistani businesses had also moved operations to Dubai before the conflict. Thousands used the UAE as a base for legitimate business with countries including India and Bangladesh. The conflict has disrupted their investments and operations. Currency traders expect billions of dollars to return to Pakistan even if conditions in the Gulf improve, as investor confidence in Dubai weakens.

Meanwhile, Pakistan’s property market is showing signs of recovery. Property traders report increased transactions and rising prices. “The government is also taking various steps to boost the construction industry and this effort has led to the recovery in property prices. Property prices in other areas of Karachi have increased by 20 to 25 percent,” said property trader Mr. Karim Dad.