Dubai free zones to gain from Trump tariff policies as businesses eye neutral UAE

Arabian Business

25-04-2025

Dubai's free zones may see increased demand from global manufacturers and logistics firms seeking to realign their supply chains in response to US import tariffs proposed by US President Donald Trump, commercial real estate experts told Arabian Business.
Trump has pledged sweeping tariff increases if re-elected, including a baseline 10 per cent levy on all imports except those from Canada and Mexico, and significantly higher rates on goods from countries such as China (60 per cent), Vietnam (46 per cent), and South Korea (25 per cent). The proposed policy, aimed at protecting US manufacturing, is already prompting supply chain recalibrations among multinational firms.
'Tariff policy may be decided in Washington, but its effects are felt globally,' said PP Varghese, Head of Professional Services at Cushman & Wakefield Core. 'For commercial real estate in the Middle East, the implications could be significant.'
Varghese said that global corporates are actively rethinking production footprints, and that the UAE — particularly its free zones — stands to benefit if firms shift final assembly or light manufacturing processes to the region in order to change a product's country-of-origin classification under US customs rules.
'This could drive up demand for compliance-ready industrial space—bonded storage, value-add processing units, and export logistics hubs,' he said. Developers exposed to free zone assets may attract a broader occupier mix, while mixed-use schemes could benefit from accompanying needs in R&D, office space, and workforce accommodation.
Dubai is already positioned as a regional trade hub with advanced logistics infrastructure and pro-business regulatory frameworks. Industry players say it could emerge as an alternative platform for US-bound exports, especially for sectors like electronics, pharmaceuticals, and luxury goods, where tariff exposure is particularly acute.
However, the opportunities are tempered by risk. 'The UAE's aluminium exports to the US — valued at more than $1.4 billion annually—will be subject to a 25 per cent tariff under the new policy,' Varghese said. He added that while the UAE's low-cost production base could absorb some of the impact, the country's re-export model is more vulnerable.
'If US customs begins targeting transhipment or minimal processing, friction could emerge,' Varghese said. 'That would have knock-on effects for space absorption, rental growth, and leasing confidence in core logistics corridors.'
Wait-and-see approach
Ayman Youssef, Managing Director at Coldwell Banker, echoed the view that the tariffs are adding a layer of uncertainty for real estate stakeholders.
'While the recent US tariffs have not directly affected commercial property prices in Dubai, they have surely raised the level of uncertainty in the market,' he said. 'As a result, many investors are adopting a wait-and-see approach, monitoring how these geopolitical shifts will play out.'
At the same time, Dubai's location and infrastructure continue to support investor confidence. 'The city remains a compelling base for re-exports, assembly, and light manufacturing. Demand for prime office space is strong and being driven more by organic growth and business relocations than by tariff-related dynamics,' Youssef said.
The medium-term picture will depend on multiple variables, including the scope and enforcement of new US tariffs and how regional governments respond.
'If infrastructure is expanded and incentives sharpened, we could see meaningful relocation activity within one to three years,' Varghese said, adding that new industrial submarkets may emerge over a five-year horizon.
Experts also pointed to broader geopolitical shifts influencing business relocation.
'European regions, already under economic pressure, may feel the impact of global trade disruption more acutely,' Youssef said.
'As a result, we anticipate increased interest from European entrepreneurs and professionals looking to relocate to Dubai, drawn by its favourable tax environment and regulatory stability.'
However, both experts cautioned against overexuberance. 'Investors must conduct thorough due diligence, especially during uncertain times,' Youssef said. 'Understanding market sentiment, expected ROI, and absorption rates is critical.'
For developers, he added, prudent financial management is key.
'Relying only on client payments is risky. Developers should ensure they can independently complete projects and offer flexible payment plans to remain competitive,' he added.
Tariff disruption is not a new phenomenon, but its implications for commercial real estate could be more long-lasting this time around, analysts say.