• Tourism sector will be the first affected
• Real estate in the UAE likely to see a downturn
• Dubai, however, will continue to thrive

The head of one of the UAE’s prominent family-owned businesses warns of an impending economic backlash due to ongoing conflicts in the Gulf region, while insisting that negative global perceptions about Dubai reflect more on its critics than on the city’s actual situation.

Mishal Kanoo, the chairman of the Kanoo Group, which is based in Dubai, likens this phenomenon to the German term “schadenfreude,” which describes a sense of pleasure derived from another’s misfortune.

“It denotes enjoyment in witnessing the struggles of others,” he elaborates.

Following military actions initiated by the US and Israel against Iran in late February, Tehran has launched numerous missile and drone attacks targeting Gulf nations.

The UAE has been significantly impacted, with air defense systems intercepting many incoming threats aimed at the nation.

Although most attacks were thwarted, reports of debris falling over Dubai have fueled alarmist narratives predicting a downfall of the emirate’s economic framework, which is recognized as one of the region’s most effective diversification efforts, leveraging non-oil industries like tourism and real estate along with its reputation as a tax-friendly haven for international capital.

Kanoo points out that those reveling in the current turmoil include many expatriates who flourished in the UAE during prosperous times. “They seem to take delight in the decline of others,” he remarks, particularly singling out British media and visitors who, after enjoying their time in Dubai, become critical when challenges arise.

Internally, however, perceptions differ substantially. With over 90 percent of residents being foreign nationals, many express a positive outlook on the situation. “I’ve heard from individuals across various nations residing here saying: ‘We’re content. This is a good place, although we’re in a difficult period,’” Kanoo states.

Kanoo recognizes the severity of the situation. Through the lens of his diversified company, which has operations in travel, shipping, logistics, energy, and other sectors, he sees varying impacts across the board.

The Kanoo Group, which has roots that trace back over 132 years to a modest trading business initiated by Kanoo’s relative in Bahrain, employs more than 1,200 individuals today.

Tourism will likely be the sector to feel the initial impact, contributing over $70 billion to the UAE’s economy and accounting for roughly 13 percent of its GDP. “It will take several months—possibly up to a year—before tourism rebounds, but the attractions here at reasonable prices will bring people back,” he predicts.

Residents versus speculators

The real estate market might experience a more pronounced downturn. Dubai has seen a thriving property market for five consecutive years, fueled by affluent foreigners purchasing luxury homes and a golden visa program offering long-term residency for buyers.

The ongoing conflict could disrupt this momentum. “Honestly, the market had been critically overheated… A correction that brings prices to more reasonable levels could be beneficial,” Kanoo asserts.

This upheaval will likely distinguish between genuine residents and speculative investors. “Money tends to shy away from risk,” he comments. “Those who were merely seeking quick profits will vacate.”

For residents, however, there may be an opportunity ahead: “If developers focus on individuals looking for long-term living arrangements and price their properties fairly, they will find buyers,” he adds.

Is there a genuine capital flight?

Kanoo argues that concerns regarding a mass departure of capital are overstated. Financial centers globally experience fluctuations in capital inflows and outflows, he notes.

“In cities like Singapore, London, or Switzerland, funds move in and out regularly. It primarily depends on regulations and available opportunities,” he explains.

In 2025, the UAE attracted more high-net-worth individuals than any other nation—approximately 9,800 new millionaires bringing $63 billion in wealth, according to migration consultancy Henley & Partners.

Wealth management firms have concentrated in the Dubai International Financial Centre, where family offices oversee over $1.2 trillion in assets. Furthermore, Abu Dhabi’s sovereign wealth funds manage around $1.7 trillion, fostering a significant capital concentration that has attracted international financial giants.

Kanoo believes that unless there are drastic regulatory changes—which he considers unlikely—capital movements will only see modest shifts of 2 to 5 percent.

“To suggest a significant capital exodus of 30 to 40 percent would require substantial circumstances,” he remarks. “As of now, the nation’s defense systems remain intact, and legislation hasn’t undergone any changes.”

He acknowledges, however, that some foreign investors may exhibit caution.

Proven resilience

Kanoo asserts that reactions to the current attacks reflect a broader misunderstanding about the region. Over the last three decades, the UAE has successfully navigated wars, financial crises, and political turmoil, from the Gulf War in 1990 to the global financial crisis in 2008 and the pandemic of 2020.

“We’ve faced numerous disruptions and severe challenges… yet we’ve emerged stronger, more appealing to potential investors,” he says confidently.

“I do not view this situation as different from past events. Although it is challenging to persuade outsiders of this notion right now, we are fortunate to have strong leadership.”

The distinction in how risk is perceived is evident to him. The greater threat is not the drones overhead, but the potential for the conflict to escalate further.

“I would be more concerned if the situation worsens… if it remains contained, eventually, resources will deplete… it will cease. However, if it spreads, managing it becomes far more challenging.”

For Kanoo, contemplating leaving the country was never an option. “With all the chaos around us, I refuse to adopt a business-as-usual mindset. It simply can’t be the case,” he states emphatically.

“This is my home. My roots are here, my children reside here, and my business is established here. I have reaped the benefits during prosperous times, so I will not abandon it when conditions turn adverse.”

“Dubai’s ongoing success hinges not merely on my desire for it to flourish but on the collective interest of people worldwide invested in its future.”