As Iran attacks Dubai, the tax-free haven for the global elite could see ‘catastrophic’ fallout — ‘this can also send shockwaves globally’

Iran’s retaliation to the U.S.-Israel bombing campaign has focused heavily on its neighbors around the Persian Gulf, threatening their status as destinations for financial giants, billionaires, and wealthy tourists.

The area’s success at attracting capital from around the world over the years and diversifying away from oil could also make it a threat to global markets.

“Moved to Qatar to hide from taxes now I am hiding from Missiles,” a worker in the finance sector, who has been documenting the volleys of Iranian airstrikes from his balcony, quipped on X.

While the U.S. has military bases in the region that have also been targeted, analysts say Iran’s strategy is to inflict pain on America’s Mideast allies, including the United Arab Emirates, hoping they will pressure President Donald Trump to end combat operations.

Until then, however, social media is filling up with images of luxury hot spots literally on fire as Iran continues to lob missiles and drones at them.

An airstrike on Dubai’s Fairmont The Palm Hotel sparked a fire while also spreading panic on the famous Palm Jumeirah artificial island, where many of the city’s wealthiest residents live.

Smoke was also seen near the Burj Khalifa, the world’s tallest building, after a drone appeared to be intercepted and exploded. And in nearby Abu Dhabi, debris from another drone impacted the Etihad Towers. Kuwait City’s international airport was also attacked by a drone.

Meanwhile, DP World suspended operations at the Jebel Ali port—the largest container port in the Middle East and a key piece of Dubai’s economy—after a berth caught fire because of debris from an intercepted missile.

The port and adjacent free-trade zone account for 36% of Dubai’s GDP, and hundreds of ships near the Strait of Hormuz have frozen in place out of concern that Iran will close the vital chokepoint.

On top of that, the attacks from Iran have caused airspace to shut down around the Gulf, which has emerged as a major global airline hub that’s also a major driver of the regional economy.

“What is happening in UAE could be catastrophic, unless they pressure Trump [to] defeat Iran quickly and decisively or to fold (taco) right away,” Marko Kolanovic, former chief strategist at JPMorgan, warned on X. “With 88% of expats, tourism, finance, air and shipping exposure, this can also send shockwaves globally.”

He pointed out that Dubai suffered a real estate crisis in 2009 and 2010 that was largely contained to the city, but still had implication for global financial markets.

“This situation is much worse,” Kolanovic added.

A key question for Dubai’s future is how many expats will flee and whether they will eventually come back, now that their illusion of safety has been shattered.

Dubai has long cultivated an image of iron-clad security with many residents leaving their cars and homes unlocked. But Iran’s attacks have sparked a rush to airports, and panic-buying in some supermarkets.

“This is Dubai’s ultimate nightmare as its very essence depended on being a safe oasis in a troubled region,” Cinzia Bianco, a scholar at the European Council on Foreign Relations, posted on X. “There might be a way to be resilient but there is no going back.”

This story was originally featured on Fortune.com