Call it a byproduct of being friends with America, the glittery city of United Arab Emirates’ (UAE) Dubai, considered immune to global conflicts regardless of what happens in the rest of the Middle East, was penetrated by Iranian drone and missile salvo that was triggered by the US-Israel joint strikes that killed Iran Supreme Leader Khamenei last weekend.
All changed on Saturday for Dubai, which for decades has been described as a city with shimmering skylines, tax-free salaries, ease of doing business and – the most attractive sales pitch – being shielded from whatever was happening elsewhere in the Middle East. Follow latest Dubai news here
Iran’s retaliatory strikes across the Gulf reached Dubai’s airports, iconic landmarks such as Palm Jumeirah and Burj Al Arab hotel as well as ports – visuals that not many thought they would see in their lifetime for a city that spent four decades constructing an identity as one of the world’s most reliable places to do business in a volatile neighbourhood.
How did Dubai build itself as a glittering safe haven
Dubai’s rise from a pearling and fishing port to a global financial hub was decades in the making. According to a Reuters report which analysed how Dubai safe-haven status is being put to the test in the ongoing Middle East crossfire, Emirates airline launched in 1985, the Burj Al Arab opened in 1999, property laws in the early 2000s allowed foreign ownership for the first time – Together forming the pillars of Brand Dubai.
Today, oil accounts for less than two per cent of GDP. Trade, tourism, high-end real estate and financial services – built on regulations modelled on UK’s London and United States’ New York – power the economy. Neighbouring Abu Dhabi, home to more than 90 per cent of the UAE’s oil reserves, remains more dependent on hydrocarbons.
Beirut was once the region’s financial capital until civil war in the 1970s shattered its standing. Bahrain filled the gap before Dubai eclipsed it. Each transition was built on the same promise: stability amid regional upheaval. Dubai delivered that promise more completely than any before it.
Instability elsewhere fuelled Dubai’s ascent
Ironically, its ascent was fuelled in part by instability elsewhere. Syrians displaced by war, wealthy families unsettled by the Arab Spring, and Russians fleeing the Ukraine conflict brought capital and talent, the Reuters report mentioned.
The UAE’s population grew from about a million in 1980 to 11 million in 2024.
Last year, it was projected to attract a record 9,800 relocating millionaires, more than any other country, according to Henley & Partners. Real estate boomed, pushing developer Emaar Properties to a record valuation of 149 billion dirhams ($40.6 billion) on February 25.
The launch of the Dubai International Financial Centre in 2004 gave pace to financial-sector growth. By the end of 2025, DIFC hosted more than 290 banks, 102 hedge funds, 500 wealth management firms and 1,289 family-related entities.
The Saturday that shook Dubai
Even though authorities in the UAE, a close US ally, moved quickly to contain the damage and display that the city was indeed one of the safest in the world by gestures like a visit to the popular Dubai Mall, the city remained tense with never-seen-before things happening so close.
“People are afraid of what’s happening. It’s the first time they have to hide in underground places. Dubai airport, one of the biggest in the world, has to shut down for a few days,” Reuters quoted Nabil Milali, multi-asset portfolio manager at Edmond de Rothschild Asset Management. He reduced the firm’s exposure to stocks globally last week to prepare for the possibility of an attack on Iran.
The physical damage to Dubai’s shimmering landmarks over the weekend was telling. Dubai International Airport was hit, a berth at Jebel Ali Port caught fire and the Burj Al Arab sustained damage from interceptor fragments. Three people were killed and 58 injured, according to the UAE Ministry of Defence.
On top of the above, the affect of retaliation by Iran and allies on Strait of Hormuz also added to woes. Strait of Hormuz
Strait of Hormuz, through which roughly a fifth of the world’s seaborne crude oil passes, runs through Dubai’s backyard. Iran on Monday declared the Strait of Hormuz “closed” and warned it will attack or “set ablaze” any ship trying to pass through after the recent escalation in conflict involving the US and Israel
Shipping traffic through the strait has collapsed or nearly ground to a halt, with oil tankers and commercial vessels scared to transit.