The Gulf war has curtailed the flow of black money from Pakistan to Dubai, with previously invested funds now returning and being redirected into domestic property, according to sources in Pakistan’s property and currency markets.
Thousands of Pakistanis have poured hundreds of millions of dollars into Dubai property over the years, with Pakistan twice ranking as the second-largest foreign investor in the emirate’s real estate market. It was widely believed that black money generated in Pakistan found a safe haven there, helping drive up Dubai property prices in the process.
All Pakistan Builders Association Chairman Hassan Bakhshi said roughly $60 million in illegal money had been flowing out of Pakistan into Dubai each month, but that outflow has now stopped. Currency dealers say the trend has reversed entirely, with black money already parked in Dubai now stuck, and difficult to recover given the ongoing conflict.
One currency dealer said rising remittances from Dubai reflect Pakistanis moving their liquid assets back home, as the war has fundamentally altered Dubai’s appeal as a destination for both investment and tourism. Inflows from Dubai have increased as a result, with illegal money once again finding its way into Pakistan’s domestic property market. Bakhshi said property prices in Defence have risen 50-60 percent since the Gulf war began, with much of the returning money flowing specifically into that area due to its secure property titles, free of double-filing or fraudulent dealing.
Dubai’s pull wasn’t limited to black money either. Many tech companies had relocated there before the war, drawn by a business environment free of the frequent internet disruptions and heavy tax-authority interference they faced in Pakistan. Thousands of Pakistanis had also been using Dubai as a base for legitimate business dealings with countries like India and Bangladesh. Now, with war-like conditions persisting, many find themselves stuck trying to recover their investments from the emirate.
Currency dealers say that once conditions normalise, hundreds of millions of dollars are likely to return to Pakistan from the Gulf, given that Dubai has lost considerable confidence among foreign investors. Bakhshi confirmed reports that Pakistani investors are actively working to recover their Dubai investments, even as property prices there have fallen to their lowest levels amid the conflict.
Property dealers in Pakistan say prices have begun rising since the war started, with trading activity also picking up as improved liquidity has boosted both buying and selling. “The government is also taking measures to boost the construction industry, and the rebound in property prices was the result of this effort. The property prices in other areas of Karachi have increased in the range of 20 to 25pc,” said Karim Dad, a property dealer.
