Conflict and mobility – early signals from Knight Frank

The United Arab Emirates plans to allow expats to spend more time abroad without losing their lucrative tax status, the FT reports this morning. People who have left the country since the start of the conflict are likely to be shown greater leniency, the paper says, citing people briefed on the plans.

This is likely to be the beginning of a broad campaign to shore up the UAE's attractiveness among expats, who make up the large majority of the population. Knight Frank’s teams in London and the UAE have not observed a broad shift in relocations to the UK. Activity remains limited to isolated, short-term movements, alongside understandable hesitation among would-be movers to Dubai.

There has been a modest uptick in short-term returns from Dubai – particularly among families with young children – typically framed as temporary relocations of around six months while the situation evolves. A small number of tenancies in London have fallen through as plans have been deferred, and some properties have been withdrawn from the sales market on the same basis.

Early enquiries

Early signs of interest in European markets are similarly tentative. Enquiries are largely exploratory and have yet to translate into firm relocation decisions.

Italy, Monaco and Switzerland are seeing an uptick in early enquiries, particularly in the lettings market. Geneva and Zurich have recorded increased demand for short-term rentals, including summer lets, while France has so far remained relatively quiet by comparison.

In some cases, clients are temporarily basing themselves in Europe due to travel disruption or a more general sense of caution, rather than making long-term commitments. Many wealthy clients appear to be waiting to see how events evolve; macro factors such as oil prices, inflation and interest rates are likely to shape decisions.

For now, in both London and continental Europe, the impact remains marginal, fragmented and largely confined to short-term moves in the lettings market. The more notable trend is a rise in hesitation – fewer immediate commitments to Dubai and a broader wait-and-see approach globally – with more substantive relocation decisions likely to depend on how conditions develop.

Higher inflation

The Reserve Bank of Australia yesterday became the first central bank to raise interest rates while citing the potential for higher inflation due to the Iran war. This marks the RBA's second consecutive rate increase, following a resurgence in inflation in the second half of 2025, while the unemployment rate has remained at a historic low of 4.1%. 

This is a big week for monetary policy; central banks overseeing about two-thirds of the global economy will decide where to set rates, and whether to signal to investors that they will look through a short-term spike in energy prices, or act if the conflict drags on. 
Economists polled by Reuters mostly expect a 7-2 vote by the Bank of England's MPC tomorrow to keep the base rate at 3.75%. Before the war began on February 28, a cut to 3.5% was seen as a near certainty. The BoE faces a very different set of economic circumstances to the RBA, not least because the UK unemployment rate is running at its highest level in a decade.

The conflict is already weighing on sentiment. Consumer confidence fell to its lowest level since January 2025 during early March, according to S&P Global's Consumer Sentiment Index. Households were the most downbeat about their financial prospects since December 2024, and and most cautious about making large purchases in 14 months. 

Rising mortgage rates

The Federal Reserve is also tipped to hold interest rates steady when it publishes its decision later today. The Fed has a dual mandate: to keep prices stable and to maintain maximum employment – both are in tension, with inflation remaining elevated while the jobs market weakens.

Economic projections published alongside the decision will offer some insight into where policymakers think rates are headed in light of the Middle East conflict.

Economists surveyed by Bloomberg expect them to pencil in two quarter-point rate cuts for this year.

US mortgage rates track the ten-year Treasury yield, which has surged since the war began. Data released last week by Freddie Mac showed the first signs of mortgage rates turning higher. The average 30-year fixed rate mortgage averaged 6.11% as of March 12, up from 6.00% a week earlier, though still well down from 6.65% a year earlier. 

In other news...

UK price gap between first-time properties and bigger homes at record high (FT), Business leaders call for housebuilding push to boost London economy (FT), and finally, Average age of first-time buyers rises to 34 (Times).