Riyadh fears that drones will deter investment. Meanwhile, the Emirates are taking a leap forward with Sharjah

Whilst in Yemen the pro-Iranian Houthi militia is once again on the move and preparing to lay siege to the city of Taiz, Riyadh finds itself facing a new enemy. It is a combination of drones and cognitive warfare. The constant bombardment of the country’s airports is not only causing damage to infrastructure, injuries and deaths, but also damaging the country’s image. Major financial and energy events have been cancelled. The meeting between the European Union and the GCC (Gulf Cooperation Council) has been suspended and postponed until a date to be confirmed. The message from the Houthis – and therefore from Iran – is clear: Saudi Arabia is not a safe place to invest. Whether true or false, in this world propaganda counts for as much as reality. And for Riyadh – which, compared to the United Arab Emirates, lags about a decade behind in terms of direct investment attractiveness – this could become a serious problem.

All the more so as the seven emirates, situated just a few hundred kilometres apart and having demonstrated their ability to manage a complex air defence system, are now stepping up a gear. Alternative routes to Hormuz, a diversification of investment towards India and the Far East, and, finally, scope for new ventures capable of accelerating the development of technology. And what stands out at the moment is the mobility and dynamism of Sharjah.

Around a 40-minute drive north of Dubai, the city – situated in the heart of the emirate, which until now has been known primarily for its cultural traditions – has been recording significant growth in foreign direct investment and new jobs for the past three years. Even in recent months, despite slowdowns caused by the war and drone attacks, the trend has continued. Last Thursday, a meeting on port operations was held. Over 7,000 participants, representing a large proportion of the rail logistics sector, to discuss land-based connections with the aim of bypassing Hormuz and developing routes from the UAE that can reach as far as Jordan and, if necessary, link up with the infrastructure launched by Saudi Arabia and Turkey along the former route of the Ottoman Empire railway. “Given the geopolitical situation,” said Ahmed Obaid Al Qaseer, CEO of the Sharjah Investment and Development Authority, at the event, “we believe even more strongly in logistics development”, highlighting the port of Khorfakkan, which looks directly out onto the Indian Ocean.

 Overall, Sharjah is shifting its position: from a cost-effective alternative to Dubai to a production and logistics hub with its own technological agenda. The three figures that best illustrate the current situation are the +45 per cent increase in projects funded directly by foreign capital, the approximately $15 billion in property transactions in 2025, and the recent entry of Aldar into the city’s property market with an investment exceeding $1 billion. Within the UAE economy as a whole, the two variables to keep an eye on are the trajectory of investment in the second half of 2026 and the pace of delivery of new properties, given that the strong cycle of new launches could shift the balance between supply and demand.

In early October, Emaar’s CEO, Mohammed Alabbar, stated that in 2025 the monthly supply of properties coming onto the market in the UAE stood at around 4,000 units, with around 600 contracts cancelled. Over the half-year, this figure rose to 1,200 and is now falling towards 1,000 units. Meanwhile, the occupancy rate stands at 60 per cent compared with last year’s figure. This is a sign that the war has affected the sector, though not as dramatically as in 2020, and that, conversely, the technology sector has absorbed the impact. This is particularly true in this small emirate (which has a population of 2.2 million) which, according to figures provided earlier this month by the CEO of Invest in Sharjah Mohamed Al Musharrakh, is expected to reach a target of 2.5 billion dollars. This represents a 20 per cent increase compared with 2025, driven by logistics and transport, light manufacturing and technology.