A Strong Dollar: Who Gains, Who Loses

The UAE dirham is pegged to the US dollar, and as the dollar has strengthened against the euro, sterling, the rouble and other currencies, Dubai property has become more expensive for many foreign buyers. At the same time, buyers earning in dollars or dollar-linked currencies find their purchasing power unchanged or improved relative to other markets.

Who finds Dubai more expensive

• European buyers: a weaker euro increases costs.
• Russian buyers: the fall in the rouble has sharply reduced purchasing power.
• British buyers: movements in sterling affect affordability.

Who benefits

Buyers earning in dollars or Gulf currencies, including many residents, are less affected. For them, Dubai remains competitively priced compared with other global cities.

Benefits of the peg

The dollar peg provides stability. Owners who earn rental income in dirhams effectively earn in dollars, which can be attractive for investors seeking a stable currency.

Strategies for foreign buyers

Buyers from countries with weaker currencies may consider timing their purchases, using payment plans to spread currency risk or seeking properties with strong rental income.

Effects on the market

Demand from some nationalities may slow, while others, including buyers from India, China and the Gulf, remain active.

Managing currency risk on payment plans

Buyers paying in instalments over several years face currency risk with every payment. If their home currency weakens against the dirham, each instalment costs more. Some buyers manage this by converting a portion of funds in advance when rates are favourable, holding them in dirhams or dollars until payments fall due. Others use forward contracts offered by banks to fix exchange rates for future dates. Buyers who earn income in dollar-linked currencies avoid the issue entirely. Whatever the approach, buyers should build some margin into their budgets to absorb currency movements, rather than assuming today's exchange rate will hold for the full payment period.

Our view

Currency movements affect who buys in Dubai, but the peg also brings stability. We help clients understand currency effects on their investments.