KARACHI: The Gulf war has curbed the outflow of black money from Pakistan to Dubai, while funds already invested are returning and being diverted into property in the country, according to sources in the property and currency markets.

Thousands of Pakistanis have invested hundreds of millions of dollars in Dubai, particularly in property. Pakistan was identified twice as the second-largest foreign investor in Dubai property. It was widely believed that black money created in Pakistan had a safe haven in Dubai and was a catalyst for property price hikes there.

“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 All Pakistan Builders Association Chairman Hassan Bakhshi.

Currency dealers said the situation has reversed, with black money in Dubai stuck and recovery difficult due to the ongoing war.

Pakistanis struggle to recover investments as black money fuels Karachi property rally

“The higher remittances from Dubai reflect that Pakistanis are sending back their liquid assets to Pakistan,” said a currency dealer. The war has changed Dubai’s appeal as a destination for investment and tourism.

Inflows from Dubai have increased. The impact is that illegal money being created in Pakistan has once again diverted towards the property business.

“Property prices in Defence went up 50-60 per cent 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 Mr Bakhshi.

Not only was black money going to Dubai, but many tech companies had also shifted there before the war because of a hurdle-free business environment. They were also moving abroad due to frequent internet connectivity issues and excessive interference from the tax authorities.

Thousands of Pakistanis were using Dubai as a third country and conducting legal business with countries such as India and Bangladesh. Now they are stuck and trying to recover their investment from Dubai, as the war-like situation still prevails.

Currency dealers said that once the situation normalises, hundreds of millions of dollars would return to Pakistan from the Gulf, as Dubai has lost the confidence of foreign investors.

Mr Bakhshi also endorsed reports that Pakistani investors were trying their best to recover their investments from Dubai, but property prices in the war-affected country have fallen to a minimum level.

Property dealers said that prices in Pakistan have started to increase after the war, and trading has also increased. Both buying and selling have increased due to improved liquidity.

“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.

Published in Dawn, September 1st, 2026