Markets

Dubai shares slide nearly 2% on Israel and Iran tensions

June 13, 2025, 11:56 AM

Firefighters at a damaged building in the aftermath of Israeli strikes, in Tehran, Iran

Markets react to Israeli attack
DFM General Index down 1.87%
Real estate slumps by almost 4%

Dubai’s benchmark stock index fell sharply on Friday, as heightened geopolitical tensions in the Middle East triggered a sell-off in heavyweight property shares.

The DFM General Index dropped 1.87 percent after Israel launched strikes on Iranian military targets.

Israel said it had hit nuclear and missile sites as well as targeting senior commanders, calling it the start of a prolonged operation to prevent Iran from developing a nuclear weapon.

Emaar Properties, the most heavily traded stock by value, fell 3.46 percent to AED12.55 ($3.42), while its development arm Emaar Development lost 3.9 percent, falling to AED12.30. Nearly AED318 million worth of shares changed hands across 25.5 million shares.

The real estate sector index declined 3.8 percent.

“While the region’s geopolitical flashpoints have existed for a long time, the scale and likely retaliation to today’s initial attack are worrying the markets,” Vijay Valecha, chief investment officer at Century Financial, told AGBI.

The DFM Index briefly plunged as much as 650 points, or nearly 5 percent, in early trading, which he said indicated “heightened anxiety”.

The drop in Emaar and prominent banks “reflects Dubai’s high-alpha, high-beta profile”, he said, meaning higher risk and higher potential return.

“With Dubai now a proxy bet on the Middle Eastern Capital markets’ growth story, such volatility moves can be considered the new normal in this globally disoriented world order.”

He added that while oil price spikes have historically supported Gulf markets, this time investor reaction was more cautious.

“Regional equity investors’ initial reaction to the oil spike suggests that markets cannot absorb a major spike in oil prices and the corresponding rise in inflation,” Valecha said.

“A surge in oil prices also likely means an effective increase in global real interest rates. This will likely be a big dampener for property buyers since it increases the overall financing costs.”

Norbert Ruecker, head of economics and next generation research at Julius Baer, said he expects oil prices to follow the usual pattern around such geopolitical events, with prices rising temporarily before returning towards previous levels.

“The peak and duration of this pattern depends on the intensity of the conflict,” he said, but historically it has averaged below 20 percent in price gains and a length of up to three months.

Dubai’s economy is not reliant on oil, but its real estate market is highly exposed to external sentiment, US rates and banking sector liquidity.

“The overall fundamentals of the Dubai economy remain strong, supported by recent earnings releases from the companies,” Valecha said.