As protectionism rises, UAE real estate becomes a global shock absorber

As the US edges closer to its 2025 tariff hikes, much of the commentary has focused on supply chains, inflation and global trade disruptions. But the consequences of escalating protectionism extend well beyond container ports and customs policies. 

In regions like the Middle East, and particularly the UAE, these tariffs are poised subtly – but powerfully – to reshape patterns of global capital allocation. One asset class stands to gain in the midst of the turbulence: real estate.

Historically, global trade shocks have spurred investors to rebalance portfolios toward tangible assets that offer yield, stability and geopolitical insulation.

We saw this dynamic play out during the US-China trade war between 2018 and 2020, when capital flowed from manufacturing-heavy equities into infrastructure and property markets.

A similar trend may now be unfolding – with the UAE, and its property sector in particular, positioned as a net beneficiary.

A hub at the crossroads, or in the crosshairs?

The UAE is no passive observer in this global reshuffling. Its role as a re-export hub for Asia, Africa and Europe places it at the crossroads of global trade.

But this same strength leaves it vulnerable to any tariff regime which throttles liquidity or raises costs across supply chains. 

The real estate market, paradoxically, may serve as a buffer against that volatility. Why? Because capital that may have been earmarked for trade-driven infrastructure investment can now be redirected into the relative predictability of UAE property yields, where average rents increased by 19 percent as of December 2024 with gross yield increasing from 6.2 percent to 6.7 percent during the one-year period, according to Deloitte Middle East’s Real Estate Predictions 2025 report, outpacing the growth in prices and notably above global benchmarks.

This is not mere theory. In the first quarter of 2025 alone, Dubai’s residential sales volumes rose 15 percent year-on-year according to Property Monitor Dubai. Off-plan transactions accounted for over 60 percent of activity, thereby signalling continued investor appetite despite rising macroeconomic headwinds. 

Sovereign wealth funds in the region may choose to double down on logistics and warehousing assets, not just to manage supply chain risks, but to capitalise on the UAE’s growing role as a regional consumption centre in its own right.

In effect, UAE real estate may be emerging as a “shock absorber” – an asset class that attracts capital during geopolitical tremors, while simultaneously hedging against them. 

The combination of dollar-pegged currency stability, high yields, no capital gains or personal income tax, and progressive visa reforms (such as the 10-year Golden Visa) continues to bolster the UAE’s appeal to both institutional and individual investors.

Dubai, for instance, recorded real estate transactions worth AED761 billion ($207.2 billion) in 2024 – its highest annual total on record.

Of course, this resilience has limits. If tariffs slow global trade meaningfully, mid-tier housing segments in Dubai and Sharjah may experience cooling demand, especially among expatriate populations sensitive to employment shifts in logistics and trade-related sectors. 

Already, there are signs of price stabilisation in some submarkets. But such risks are arguably cyclical – not structural – and may even present entry points for long-horizon investors.

Ultimately, while the political theatre of tariffs plays out in Washington, Beijing and perhaps even Brussels, investors should look more closely at other markets to understand how and where capital is actually moving. 

• Middle East fails to escape Trump’s tariffs
• Matein Khalid: The Gulf won’t escape the fallout of Trump’s shock tariffs
• Frank Kane: Trump’s tariffs bring that sinking Lehman feeling

The strategic realignment we’re witnessing is not only about rerouted supply chains – it’s about reimagined safe havens. And in that calculus, UAE real estate is not merely a beneficiary. It is a barometer for the new global order.

Martin Linder is managing partner and CEO at Global Partners Limited, an alternative asset manager based in Dubai