How Global Tariffs & the India-US Trade War Impact Dubai Real Estate

Global Investor Shift

When trade wars escalate between major economies like India and the US, global investors often look for safer havens. The uncertainty created by tariffs pushes capital towards markets that offer stability, strong regulation, and reliable returns. Dubai, with its tax-free environment and USD-pegged currency, naturally emerges as one of the most attractive options.

Indian Buyers in Dubai

Indians have long been the top foreign investors in Dubai property. In the event of a trade war, some mid-market Indian buyers may pull back if the rupee weakens, as properties priced in AED/USD suddenly become more expensive. However, wealthier investors are likely to continue buying as a way to protect their wealth in USD-linked assets. This dynamic could shift the balance towards higher-value property purchases in Dubai.

US Investors’ Interest

For US-based businesses and individuals, Dubai’s position as a neutral hub becomes even more valuable when trade tensions are high. American investors may explore Dubai both as a place to relocate business operations and as a safe base for residential or luxury investments. This can strengthen demand for both commercial and upscale residential property.

Rental Market

As companies and professionals redirect operations to Dubai during times of instability, demand for housing grows. This often translates into stronger rental yields, especially in communities close to business districts and free zones. For buy-to-let investors, trade wars can inadvertently increase the attractiveness of Dubai property as rental markets tighten.

Market Confidence

Ultimately, what stands out during periods of geopolitical turbulence is Dubai’s consistent positioning as a transparent and investor-friendly real estate hub. While tariffs may unsettle traditional markets, Dubai’s combination of regulatory strength, strategic location, and tax-free ecosystem helps build long-term confidence for global property buyers.

Indians are consistently the top foreign investors in Dubai real estate, accounting for around 20-22% of foreign transactions. A tariff war can alter that dynamic significantly.

Indian Rupee Weakness:

If tariffs pressure India’s economy and weaken the INR, Dubai property (priced in AED/USD) becomes more expensive for Indian buyers.

• Example: If 1 AED = ₹23 → a property worth AED 1 million costs ₹23 million.
• If the rupee weakens to 1 AED = ₹27 → the same property = ₹27 million.

This difference of ₹4 million can discourage mid-income Indian buyers, while high-net-worth investors may still proceed with purchases as a hedge, protecting their capital in USD-pegged Dubai real estate.

Dubai is a historic trade hub between India, the Middle East, Africa, and Europe. In a tariff war scenario:

• Rerouting Trade: Indian exporters losing direct US access may reroute goods through Dubai’s free zones to reach other markets.
• More Activity in Jebel Ali & Dubai South: Logistics, warehousing, and re-export increase.
• Business Expansion: US and Indian firms see Dubai as a neutral base, boosting demand for office space, warehouses, and staff housing.

This generates ripple effects in the residential and rental markets.

Trade disruptions can paradoxically boost Dubai’s rental yields, as companies and professionals shift operations.

Expat Relocations: 

More professionals move to Dubai as firms adjust supply chains and with Rental Yields already being high in Dubai. On average, Apartment yields in Dubai rose 20.82% YoY (August 2025), on average Villa Rents grew 13.47% YoY (August 2025) and Gross Yields in Dubai as a whole on average have been between 5.5%-7.2% depending on area.

These but Dubai Yields higher than London (3-4%) or New York (4-5%) already, with this potentially set to grow as trade disruptions cause movement in capital, resources, people and inevitably markets. 

Investor Pro-Tip: Measure the expected/sepculated influx of people looking for mid-market rentals, against the supply of mid-market rentals before opting to purchase a rental yield property. 150,000 new units are set to enter the rental market between Jan 2025 and March 2026.

Further Reading: Understanding Supply and Deamnd in the Dubai Real Estate Market

Tariffs don’t just affect buyers - they affect developers.

• Materials: Steel, aluminum, cement costs may rise if global shipping or raw material prices increase.
• India-UAE CEPA Deal: Mitigates some risks by reducing tariffs on goods flowing directly between the two countries.
• Currency Effects: A weaker INR can lower input costs for UAE developers importing Indian materials however, volatile FX and shipping costs can add uncertainty to budgets.

Developers may adjust by staggering launches or innovating with phased construction and modular designs.

Despite external volatility, Dubai’s fundamentals remain strong:

• AED Peg to USD: Ensures monetary stability; UAE mortgage rates track US Fed policy.
• Vision 2040: Population target of 7 million, backed by AED 200B+ infrastructure spend.
• Investor Confidence: Global buyers see Dubai as a neutral, tax-free hub with robust regulations.

his structural resilience often turns global uncertainty into local opportunity.

Uncertainty doesn’t mean “stay away” - it means play smart:

• Prime Focus: Prioritize income-producing assets in Downtown, Marina, DIFC.
• Diversification: Avoid concentrating all exposure in Dubai; balance with Indian/global assets.
• Currency Hedge: Monitor INR–USD; consider timing purchases when rupee stabilizes.
• Partner Wisely: Stick with developers with proven delivery track records.
• Look to Rentals: Short-term volatility may push more demand into the leasing market.