The Gulf war has curbed the flow of undeclared Pakistani money into Dubai, according to property and currency market sources.
They said funds already placed in the emirate were returning to Pakistan and moving into local real estate.
Thousands of Pakistanis have invested hundreds of millions of dollars in Dubai, mainly in property. Market reports previously ranked Pakistan as the second-largest foreign investor in the sector on two occasions. Market participants said undeclared wealth from Pakistan had also helped drive prices higher.
Dubai loses its safe-haven appeal
“About $60 million in illegal (or black) money is created in Pakistan per month and has been invested in Dubai, but this has now stopped,” All Pakistan Builders Association Chairman Hassan Bakhshi said.
Currency dealers said the conflict had reversed the flow. They added that some investors could not recover money trapped in Dubai.
“The higher remittances from Dubai reflect that Pakistanis are sending back their liquid assets to Pakistan,” said a currency dealer.
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State Bank of Pakistan data showed total workers’ remittances reached $3.6 billion in July 2026, rising 13 per cent annually. Saudi Arabia and the UAE jointly contributed more than $1.65 billion.
However, official remittance data covers family maintenance and other legitimate transfers. It does not identify undeclared capital or prove that Dubai property investments have returned.
The conflict has also weakened Dubai’s appeal as a destination for investment and tourism, market sources said.
Karachi property prices climb
Bakhshi said returning liquidity had fueled a sharp rally in Karachi’s Defence areas.
“Property prices in Defence went up 50-60 per cent after the Gulf war started. Since the title of the Defence property is safe (meaning no double filing or fake dealing), most of the money is going towards the area,” he said.
Property dealers also reported stronger buying and selling across Karachi as liquidity improved.
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“The government is also taking measures to boost the construction industry, and the rebound in property prices was the result of this effort. The property prices in other areas of Karachi have increased in the range of 20 to 25pc,” property dealer Karim Dad said.
Dubai’s official data presents a mixed picture. The Dubai Land Department said first-quarter transaction value rose 31 per cent to AED252 billion.
Reuters later reported that transaction volumes fell 37 per cent annually during the first 12 days of March. Some properties also faced price cuts of 12 to 15 per cent.
Businesses and investors seek exit routes
Before the war, several Pakistani technology companies shifted to Dubai for its easier business environment. Internet disruptions and tax authority interference in Pakistan also encouraged the move.
Thousands of Pakistanis used Dubai as a third-country base for legal trade with India and Bangladesh. Many now face disruption and are trying to recover investments while war-like conditions persist.
Currency dealers expect hundreds of millions of dollars to return once conditions normalize. They argued that the conflict had damaged Dubai’s standing among foreign investors.
Bakhshi also endorsed reports that Pakistanis were seeking exits while prices in the war-affected market remained severely depressed.
