KARACHI: Some Pakistanis are selling Dubai property and redirecting part of the proceeds into luxury homes in Karachi, investors and developers said this week, as the US-Iran war erodes the Gulf city’s long-held appeal as a safe haven.

The reported movement mirrors a broader slowdown in Dubai’s property market since the war began. Real estate transaction volumes in the United Arab Emirates fell 37 percent year-on-year during the first 12 days of March and were down 49 percent from February, according to Goldman Sachs estimates. Some Dubai properties were subsequently offered at discounts of 12-15 percent.⁠

By May, Dubai property sales had declined another 19 percent from April, when they had fallen 4 percent, according to real estate consultancy ValuStrat. Analysts said the conflict had unsettled investors drawn to Dubai by its tax-free status, political stability and reputation as a refuge during previous regional crises.

“Money is not going to Dubai anymore,” Mohammed Hassan Bakshi, chairman of the Association of Builders and Developers of Pakistan, told Arab News. “People are worried due to war and instability in the region. The money which was available in liquid form is being sent back to Pakistan.”

The conflict began on Feb. 28 when the United States and Israel attacked Iran, prompting Tehran to strike Israel and Gulf states hosting US forces, including the UAE. The attacks disrupted trade and energy flows and punctured perceptions that Dubai was insulated from regional instability.

Bakshi said some Pakistani investors were selling or waiting to liquidate Dubai assets and moving part of their money into high-end and high-rise developments in Karachi, particularly in the upmarket Defense Housing Authority district.

“People are waiting for liquidation, especially those communities who see themselves to be vulnerable in the given circumstances in Dubai,” he said.

Pakistan’s finance adviser Khurram Schehzad and State Bank chief spokesperson Noor Ahmed did not respond to requests for comment.

A Dubai-based Pakistani investor who advises wealthy clients said she had also seen some people reduce their property exposure in the emirate and redirect money to Karachi.

“In Dubai, people have been selling,” she told Arab News, requesting anonymity because of the sensitivity of her clients’ investments.

“That is to move funds to what they now consider a bit safer haven, which happens to be DHA in Karachi,” she said.

But she described the movement as portfolio rebalancing rather than a mass withdrawal from Dubai.

“It’s not like something crazy, but people who owned 10 villas back then would potentially be sitting at six right now or seven right now and would have sold the remaining three or four just to do some portfolio shuffle,” she said.

Official Pakistani data show foreign inflows have risen sharply during the conflict, although they do not reveal whether the money came from property sales.

Workers’ remittances from the UAE rose approximately 13 percent year-on-year to $5.55 billion between February and August, according to State Bank of Pakistan data. In May alone, UAE inflows climbed 36 percent to $1.01 billion.

Pakistan received $3.66 billion in total remittances in August, 16.5 percent more than a year earlier. Inflows during July and August, the first two months of the current fiscal year, rose 14.7 percent to $7.3 billion.

Inflows through Roshan Digital Accounts, which allow overseas Pakistanis to hold funds and make payments and investments inside the country, increased 52.2 percent year-on-year to $1.74 billion between March and August, according to Arab News calculations based on central bank data.

April recorded the sharpest rise, with RDA inflows increasing 81.4 percent to $321 million. The number of accounts grew by 56,737 between February and August to reach 966,144.

Bakshi said some proceeds from overseas asset sales could be entering Pakistan through remittance channels or RDAs, but the official data do not identify their original source or eventual use.

Zafar Sultan Paracha, secretary-general of the Exchange Companies Association of Pakistan, said the war may have supported inflows but cautioned against treating rising remittances as evidence of large-scale investment repatriation.

“We cannot say how much is the amount that the overseas Pakistanis regularly send for their homes and how much is the investment value,” he told Arab News.

“Overall, we can say that these circumstances [war] have supported our remittances. And the people who used to consider their money to be safe outside of Pakistan, now consider it to be safer in Pakistan.”

Bakshi said increased demand had contributed to higher prices in some of Karachi’s most expensive neighborhoods.

“A plot that sold for Rs400 million [$1.44 million] before February is now fetching Rs600 million [$2.16 million] in DHA,” he said.

No independent transaction data were available to verify the scale of the increase or determine how much of it was driven by returning overseas money.

Muhammad Waqas Ghani, head of research at JS Global Capital, said Pakistan’s remittance growth was broad-based and partly reflected the increasing use of formal foreign-exchange channels.

“There may have been some precautionary transfers because of the situation in the Gulf region, but largely, our remittance numbers are solid,” he said.