'Dubai's nightmare': Iranian strikes shatter calm of UAE business hub
Iran unleashed a furious missile and drone assault across the Arabian Gulf on Saturday in response to a surprise US-Israeli attack, but one city in particular appeared to bear the brunt of it: Dubai.
The Gulf emirate, one of seven in the UAE, is the region’s good-time capital, where lucrative business deals can be sealed and celebrated. On Saturday, it was engulfed in billowing smoke and flames as missiles and drones rained down on it.
The strikes have more than just geopolitical significance, denting Dubai's reputation for being an oasis of calm and commerce in the Middle East.
Dubai has benefited potentially more than any other city in the world from the post-Covid boom of soaring asset prices, cryptocurrency, and remote work.
Capitalising on its low tax rate and smooth bureaucracy, Dubai has become a magnet for London bankers and American “finance bros." Its financial institutions have served as a haven for Sudanese militia leaders dealing in gold to Russian and Ukrainian expats fleeing war in Eastern Europe.
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Dubai’s property market is a testament to its success, with prices up 75 percent since 2020.
Will Dubai's real estate boom be repriced by a long war?
A prolonged war in the Middle East could make investors, big and small, think twice, some say.
Perhaps the most symbolic image out of Dubai on Saturday was a fire engulfing the grounds of the five-star Fairmont Hotel.
Despite commentary that the hotel was on fire as a result of interceptor debris, multiple videos suggest it could have been hit by an Iranian drone. Footage of a drone slamming into Dubai’s Palm Jumeirah appears to match that of a drone hitting the headquarters of the US Fifth Fleet base in neighbouring Bahrain.
A separate video shot from a balcony appears to show the drone hitting the Fairmont Hotel.
"This very frame is already being forwarded to every group chat, every boardroom, every family WhatsApp thread of every expat who chose the UAE over Singapore, over London, over Zurich,” one commentator on X said.
“The calculation that built modern Dubai is being repriced in real time by people watching their skyline burn through their bedroom windows,” the person added.
Dubai was not decimated by Iranian strikes, but the fallout has shown that Dubai is not insulated from the Middle East’s unpredictable politics, which could dent asset prices and cause footloose investors to rethink.
“This is Dubai’s ultimate nightmare as its very essence depended on being a safe oasis in a troubled region,” Cinzia Bianco, an expert on the Gulf at the European Council on Foreign Relations wrote on X. “There might be a way to be resilient but there is no going back.”
Emirati officials were forced to evacuate Dubai's Burj Khalifa, the world's tallest building, amid the Iranian assault. Meanwhile, Al Maktoum International Airport, lauded as the world’s busiest, suspended flights indefinitely.
The rest of the Arabian Gulf is essentially fighting for a slice of Dubai’s business, pitching themselves to the same class of wealthy global citizens, albeit with slightly different marketing spins: stealth-wealth Doha, upstart Riyadh, and traditional Muscat.
'This is Dubai’s ultimate nightmare as its very essence depended on being a safe oasis in a troubled region'
- Cinzia Bianco, European Council on Foreign Relations
Even officials from poorer, aspiring states like Syria, Egypt, and Jordan point to Dubai as a model for their development in conversations with journalists and bankers.
The Iranian attacks underscore how susceptible any regional business bubble is to the whims of Israeli and US policymakers.
US President Donald Trump characterised his war on Iran in a video released on Saturday as a regime change operation.
Some ports get US Navy traffic around Dubai, but the strikes are also notable because the city-state is not in the vicinity of any known US military bases, which suggests Iran is targeting Dubai because it is a business hub.
One Gulf official told Middle East Eye this week that their leadership expected the UAE to come under intense Iranian fire because of its geographic proximity to Iran and Abu Dhabi's closeness to Israel.
The UAE has emerged as Israel's closest Arab partner since they normalised ties under the 2021 US-brokered Abraham Accords.
Has Iran given the Gulf an excuse to join the US war?
The US’s Al Dhafra Airbase is located near Abu Dhabi, the UAE capital, about 140 kilometers from Dubai.
The strikes that have hit tiny Bahrain appear to have targeted the headquarters of the US’s Fifth Fleet, which is practically located inside its capital, Manama.
Likewise, Al Udeid Airbase is just 35 kilometers away from Doha, which has also come under Iranian fire.
At the same time, Iran's strikes across the Gulf appear to have united regional leaders who were at odds with each other over Sudan, Yemen, and Gaza.
Saudi Crown Prince Mohammed Bin Salman held a phone call with his Emirati counterpart, Mohammed Bin Zayed, on Saturday and expressed solidarity with the UAE.
By unleashing strikes across the Gulf, Iran might be giving Arab monarchs the excuse to back the US in its war.
"Iran is forcing the GCC [Gulf Cooperation Council] up the escalation ladder. They will have to consider responding or, at a minimum, allowing the US greater operational freedom to conduct offensive operations from their territories," Firas Maksad, at the Eurasia Group, wrote on X.
Iran, on the other hand, might be calculating a different outcome where Gulf countries pressure the US to de-escalate the conflict, particularly if they start suffering heavier losses from Iranian strikes.
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