The US-Iran war has slowed the movement of black money from Pakistan to Dubai, while some Pakistani investors are bringing funds back from the United Arab Emirates (UAE) and putting them into the local property market, according to property and currency market sources.
Thousands of Pakistanis have invested in Dubai, particularly in real estate, with Pakistan twice ranking as the second-largest foreign investor in Dubai’s property market.
All Pakistan Builders Association Chairman Hassan Bakhshi said that around $60 million in illegal or undeclared money was generated in Pakistan each month and invested in Dubai, but that flow had now stopped.
“About $60 million in illegal (or black) money is created in Pakistan per month and has been invested in Dubai, but this has now stopped,” said Bakhshi.
Currency dealers said that the flow had started moving in the opposite direction, with some funds in Dubai becoming difficult to recover now because of the ongoing war.
“The higher remittances from Dubai reflect that Pakistanis are sending back their liquid assets to Pakistan,” said a currency dealer.
The shift has also affected Pakistan’s property market, with money returning from Dubai being directed towards real estate in the country.
Bakhshi said property prices in Karachi’s Defence area had increased by 50–60 percent since the Gulf war began.
“Property prices in Defence went up 50-60 percent after the Gulf war started. Since the title of the Defence property is safe (meaning no double filing or fake dealing), most of the money is going towards the area,” said Bakhshi.
He added that black money generated within Pakistan, which was previously being moved to Dubai, was now also being channelled into the local property market.
The shift is not limited to property investors. Several Pakistani technology companies had moved to Dubai before the war to work in its tax-free business environment, while some had also sought to move abroad due to internet connectivity problems and what they described as excessive interference from tax authorities.
Thousands of Pakistanis also used Dubai as a third country to conduct legal business with countries including India and Bangladesh. Currency dealers have said that some of these investors are now trying to recover their funds from Dubai amid the ongoing conflict.
They added that hundreds of millions of dollars could return to Pakistan from the Gulf once conditions normalise, as the conflict has affected investor confidence in Dubai.
Bakhshi also backed reports that Pakistani investors were trying to recover their Dubai investments, adding that property prices there had fallen amid the conflict.
Property dealers pointed out that activity in Pakistan’s real estate market had increased, with both buying and selling picking up as more money became available.
“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 property dealer Karim Dad.
