Will Trump’s Tariffs Impact UAE Real Estate?

Executive Summary

Dubai’s strategic position as a resilient investment hub continues to strengthen amidst ongoing global economic shifts. Its ability to attract consistent foreign investment is underpinned by a strong trade infrastructure, proactive economic policies, and a diversified economy that helps buffer external shocks such as fluctuating tariffs and trade disruptions. This paper examines Dubai’s growth in real estate, its rising appeal to global investors, and the role of government initiatives in shaping its future economic trajectory.

Macroeconomic

 Economic Resilience Amid Global Volatility

Despite global economic volatility, the UAE maintains a strong economic outlook, driven by rising energy production, a robust tourism sector (Dubai welcomed 19 million visitors in 2024), population growth (currently 12 million nationwide, 4 million in Dubai), and a steady pipeline of 3,500 infrastructure and real estate projects. High public spending and diversification efforts continue to mitigate external risks. While US -imposed tariffs (25%) on iron, aluminium, and steel introduce potential headwinds particularly for non-oil GDP the UAE remains the second-largest aluminium supplier to the US, exporting 350,000 tonnes in 2024 contributing heavily to industries such as aerospace, defence, real estate, and automotive manufacturing. The recent announcement of a $1.4 trillion investment in the USA in a new aluminium smelter is expected to double domestic production, reinforcing trade stability. Additionally, strategic trade diversification and the UAE’s competitive positioning such as in logistics and finance help cushion any adverse effects.

Government Strategy and Future Economic Growth

Government initiatives continue to drive economic expansion, with plans to double FDI inflows to $65 billion by 2031 across logistics, finance, renewable energy, and IT. Dubai’s Real Estate Strategy 2033 aims to increase housing supply and homeownership to 33% while doubling the sector’s contribution to GDP. The UAE’s oil output is expected to hit 3.27 million barrels per day by 2026, in line with OPEC+ plans. At the same time, ADNOC is working towards increasing production to 5 million barrels per day by 2027. The UAEs AED 71 billion fiscal budget for 2025, AED 28 billion has been allocated towards social development, pensions, education, and infrastructure with AED 2.6 billion set aside for transportation and logistics. Although fiscal surplus is expected to moderate to 3% of GDP, sustained oil pricing and revenue diversification ensure stability. The IMF forecasts non-oil economic growth in the GCC to slow to 3.4%, but the UAE remains a regional leader, outpacing Oman and Saudi Arabia with an expected 4.6% growth through 2026.

Figure 1: Non-oil GDP has remained steady, supported by the government’s diversification efforts. Continued growth is expected as these strategies expand further.

Figure 2: The chart shows where the GCC exports go globally, and it’s clear the US accounts for only a small share despite GCC supplies 16% of US Aluminium, suggesting the region isn’t heavily exposed to the American market.

Figure 3: The chart illustrates the global sources of US imports, highlighting that the GCC accounts for only a small proportion. This suggests the region holds relatively limited strategic importance in terms of US import.

Figure 4: Despite global tensions and downgraded growth forecasts for the U.S., Japan, China, and the Euro Area, the UAE and broader GCC remain unaffected.

Figure 5: GCC per capita remains high and continues to grow, with the UAE outperforming many developed economies.

Dubai as a Safe-Haven – Trade, Investment, and Real Estate Strength

Market Dynamics

While the recently imposed 25% US tariffs on steel and aluminium directly target imports into the American market, they do not immediately affect the cost of construction materials in Dubai, as the UAE is not subject to reciprocal duties on its own imports. That said, currency fluctuations and broader economic uncertainty arising from global trade tensions may elevate input costs across sectors, including logistics and construction. However, these pressures may be mitigated or even offset by a surge in investor interest, as geopolitical instability elsewhere often reinforces Dubai’s appeal as a haven for capital.

Dubai’s Trade Hub Advantage and US Policy Shifts

Dubai has become particularly attractive to Asian investors, especially from China, as they redirect capital flows away from unstable markets. Conversely, Dubai’s strategic position as a global trade hub could create new opportunities. The city may benefit from increased re-exports and transshipment activities, as companies seek to mitigate the effects of tariffs by rerouting goods through Dubai’s free zones such as Jabel Ali Free Zone.

It is also worth noting that while the US maintains a free trade agreement with Canada and Mexico, the tariffs have still been imposed even though nearly one-third of US aluminium and steel imports come from Canada. Considering current political tensions with Canada and President Trump’s recent efforts to strengthen ties with Gulf states including visits to Saudi Arabia, the UAE, and Qatar there is a strategic possibility that the US may pursue a bilateral deal with the UAE to reduce its reliance on Canadian metal imports. Such a deal could not only boost the UAE’s aluminium export volumes to the US but also offer US a basis to lower tariffs on imports from Gulf partners, reinforcing economic and political alliances in the region.

Figure 6: Dubai’s FDI has doubled from 2020 to 2024, highlighting its flexibility as a top investment hub. The outlook for 2025 remains strong despite global uncertainties.

Sustained Foreign Interest in a Stable Market

Dubai’s real estate market has remained robust, with strong demand from Indian, European, Chinese, and Pakistani investors. Off-plan developments have drawn significant interest. Betterhomes experienced the same trend in Q1 2025, with Indian, Pakistani, British, Italian, and German buyers remaining the most active in the market. Following a strong Q1, total transactions in April surged by 23% month-on-month, reaching a total of AED 46 billion.

Figure 7: EMAAR sales by nationality reflect changing buyer dynamics

Real Estate Market Outlook and Future Growth

Despite challenges posed by fluctuating oil prices and global market shifts, Dubai’s real estate market remains resilient, benefiting from sustained foreign investment and economic diversification. The emirate has recorded the largest influx of millionaires globally, further solidifying its position as a haven for investment. Additionally, infrastructure projects, backed by government initiatives, continue to improve connectivity, supporting the ongoing expansion of the real estate market. In 2024, Dubai saw a steady increase in mortgage transactions, with significant demand for villas and townhouses. With 90% of villa and townhouse communities experiencing demand exceeding supply, property values continue to rise, reinforcing Dubai’s position as a top global real estate destination.

Figure 8: This chart illustrates how the UAE’s import and non-oil export patterns differ, signalling broader shifts in trade partnerships and a move toward greater diversification in its external trade strategy.