Posted by Back in January, I took the family to Dubai for my wife’s birthday. We were staying at a stunning hotel, the Fairmont on the Palm.
While we were still out there, I was on the beach scrolling through my phone when I saw that KLM and Air France had halted flights to Dubai, with Lufthansa quickly following. I remember showing my wife and genuinely wondering whether we should just head to the airport. We were only four days into a ten-day trip. In the end, we stayed. But it was genuinely unsettling.
A few weeks after we got home, the hotel was struck by an Iranian drone, and the room we’d stayed in was directly above where it hit.
The situation has been volatile ever since, and whatever the latest headlines say by the time you read this, one thing is clear: we’re in a very different world than we were even six months ago. And that has real implications for property and investment that are worth thinking through carefully.
Understanding the Strait of Hormuz
You’ve undoubtedly seen The Strait of Hormuz talked about constantly in the news, but why is it so important?
It’s a narrow waterway between Iran and Oman, and is the only sea route out of the Persian Gulf. So, if you want to move oil or gas by ship from that part of the world, there’s no alternative route.
That’s why it matters so much: it controls roughly 20% of the world’s oil and gas supply. When access to the Strait is disrupted, that supply stops moving. The longer the disruption, the further the effects ripple outward.
Regardless of how the situation resolves, there’ll be a lag before supply chains normalise. In the meantime, oil and gas reserves in places like Ireland and the UK will start to deplete. But the effects don’t stop at the petrol station. Gas feeds into fertiliser production, which feeds into food. Helium (a by-product of gas) is used to cool data centres. Pull on that thread and you start to see how far the effects reach.
Oil prices go up. Transport costs go up. Construction materials go up. All of that feeds into inflation. And when inflation rises, central banks raise interest rates. We saw this exact sequence play out after COVID. Rates went up, property prices fell, and the UK got hit harder than most simply because of the size and sensitivity of its market.
That’s just one part of what’s happening. The Strait of Hormuz might be the most visible pressure point right now, but it sits within a much broader set of forces that are all moving at the same time.
The bigger picture
The Iran situation isn’t the only thing I’m paying attention to right now. Stepping back and looking at the broader picture, there are four forces that are each significant on their own, but become something far more serious when you consider them together.
Geopolitical risk
Alongside Iran, the Russia/Ukraine conflict hasn’t gone anywhere. There’s an ever-deepening rivalry between the US and China that’s increasingly centred on AI. This isn’t a conventional arms race: it’s a race to achieve what researchers call superintelligence, a level of AI capability so powerful that whoever gets there first would have an almost insurmountable strategic advantage over everyone else.
The frightening part is that the race itself encourages cutting corners on safety, because speed is everything. The first to cross that line could theoretically shut down another country’s entire defence infrastructure. That’s no small thing.
Interest rates
The oil and gas disruption feeds directly into inflation, and inflation means higher rates for longer. Markets love cheap borrowing, so when borrowing gets expensive, investment activity slows and asset prices tend to fall. Property isn’t immune to this.
In practical terms, higher mortgage costs mean buyers can afford to borrow less, which puts downward pressure on prices. Developers find it more expensive to finance projects, so fewer get built. Landlords on variable rate mortgages see their margins squeezed, and some will exit the market altogether. For investors weighing up where to put their money, property starts to look less attractive when savings accounts and bonds are offering meaningfully better returns than they were a few years ago.
None of this happens overnight, but the direction of travel matters. Right now, the direction isn’t looking favourable.
Debt
Government debt across the Western world is at historic levels after COVID. For example, the US national debt is now generating more in annual interest payments than the country spends on its military.
The real problem is what it means for governments’ ability to respond if things go wrong. In 2008, governments could borrow heavily and spend their way out of the crisis. That option is much less available now. The room to manoeuvre simply isn’t there in the way it was.
On top of that, there is somewhere in the region of three trillion dollars in private credit out there. After 2008, the major banks pulled back from riskier lending due to tighter regulation, and private equity funds stepped in to fill the gap. The problem is that nobody has full visibility of where that money has gone or how secure those loans actually are. It may be sitting in strong, well-performing assets. Or it may not. That uncertainty is itself a risk, and it has uncomfortable echoes of the conditions that preceded 2008.
Fragmentation
Under Trump, the Western alliance that has kept a degree of stability in place since World War II is under serious strain. His approach to NATO, his willingness to weaponise tariffs against allies, his stated interest in acquiring Greenland all chips away at relationships that took decades to build.
If the US were to effectively withdraw from NATO, the implications would be severe. If there were some kind of financial crisis comparable to 2008, I genuinely don’t see Trump coordinating a global response the way Obama did back then.
In 2008, there was a concerted effort among world leaders to stabilise markets, shore up banks and prevent a complete collapse of the financial system. That kind of coordinated response requires trust and goodwill between nations. Right now, both are in short supply.
So why are markets still performing?
This is a question I keep coming back to. If all of this is true, why do equity markets continue to hold up? Why does the investment world not seem more alarmed?
Not all markets are equally exposed to what’s happening, and that goes some way to explaining why investment activity hasn’t ground to a halt.
Take Ireland. We’re building around 30,000 homes a year when we need to be building 80,000. Our population has grown by roughly a million people in the last eighteen years and we haven’t come close to housing that growth. Planning is slow, labour is scarce, and because we’re a politically neutral country, we’re more insulated from direct geopolitical fallout than most. That structural shortage acts as a floor under prices.
Compare that with Dubai, which is due to deliver around 120,000 units in 2026 alone into a market where confidence has taken a sharp hit. One of my own clients who was based there is heading back to close out his lease. That kind of sentiment takes time to reverse.
The point is that where you invest, and how you structure it, matters more than it did even two or three years ago. Blanket optimism is no longer a viable strategy.
What does this mean if you’re an investor?
Right now, the conditions around us are more fragile than they might appear. The next few years will reward people who understand what they’re doing, but it’ll also penalise the ones who are really just dabbling.
Developers who can navigate the planning system will continue to do well simply because demand isn’t going away. Anyone who can convert a piece of land to having planning permission in place (what’s known as planning gain) is in a strong position. Conversion specialists, people turning office buildings into apartments, are in a similar boat. There’s also significant and growing demand from local authorities and approved housing bodies for affordable housing solutions, and that pipeline is unlikely to dry up.
More broadly, the investors who’ll weather this period are the ones who aren’t over-leveraged, who have access to multiple funding sources rather than depending on one relationship, and who can move quickly when a good opportunity appears. Distressed sellers do emerge during periods of uncertainty, and the people who are positioned and prepared will find some genuinely good deals.
The people who will struggle are those who have borrowed heavily on the assumption that rates stay low and prices keep rising.
The bigger opportunity
Periods of uncertainty are uncomfortable, but they’re also when the best opportunities tend to emerge, for investors who are prepared and know what they’re looking for.
The fundamentals in markets like Ireland and the UK remain strong. Supply is constrained, demand is real, and that isn’t changing anytime soon. What is changing is the level of knowledge and preparation required to invest well. The days of picking almost anything and watching it go up are behind us.
If you’re serious about building a property portfolio that can withstand what’s coming, consider my Accelerator program. We’ve still got some seats available for the May intake, so take a look at the link below to find out more.