- Samir Hashemi
- Middle East business and trade correspondent
Dubai has emerged as a safe haven for wealthy Russians who want to avoid Western sanctions imposed on their country after the war against Ukraine.
In unprecedented numbers, billionaires and Russian entrepreneurs have arrived in the United Arab Emirates, according to the BBC’s heads of companies.
Russians’ purchases of real estate in Dubai rose by 67 percent in the first three months of 2022, according to a report.
The UAE did not impose sanctions on Russia, nor did it criticize its invasion of Ukraine, in addition to providing non-sanctioned entry visas to Russians, unlike many Western countries that have taken restrictive measures against these Russians. to take.
It is estimated that hundreds of thousands have left Russia in the past two months – but there are no exact numbers.
A Russian economist said about 200,000 Russians left the country in the ten days after the start of the war.
Virtuzone, a business management consultant in Dubai, has seen a huge demand from Russian clients. “Since the outbreak of the war, we have received five times more requests for inquiries from Ross than we have done before,” said CEO George Hogg.
“They fear an economic collapse. So they move here to secure their money,” Hogg said.
The influx of Russians to Dubai has helped boost the demand for luxury properties across the city. Mortgage brokers are reporting rising property prices in Dubai as Russians arrive in the city looking for homes to buy.
The Dubai real estate agency Better Homes found that Russian home purchases increased by two-thirds in the first three months of 2022.
Real estate agency Modern Living told the BBC it had hired a number of Russian-speaking agents to handle the growing demand. The company’s CEO, Thiago Caldas, said they get a lot of calls from Russians who want to move to Dubai immediately.
“The Russians not only want to invest in sales, but they look at Dubai as their second country,” Caldas explained.
Many multinational companies and Russian start-ups are taking the UAE as a new destination for their employees.
Among those companies is Weway Technology Supply Chain, which had offices in Russia and Ukraine before hundreds of its employees moved to Dubai, according to co-founder Fuat Fatulev.
Fouad, who has Russian citizenship, says: “The war greatly affected our business. We could not continue, and we had to relocate hundreds of our employees from Ukraine and Russia.”
Fouad adds that they have chosen to relocate their employees to the UAE because it provides a safe economic and political environment for doing business.
Fouad explained that Russian companies are out of the country due to the major problems they are facing and are now blocking the way to work under the sanctions. The most difficult of these obstacles is in the case of companies dealing with international clients, and many Western companies have severed ties with companies based in Russia.
Among the companies that have moved a number of their offices to Dubai: Goldman Sachs, JP Morgan and Google.
“We are in the process of a definite brain drain,” says Fouad Fatulev. “Many people are emigrating with so many restrictions on the movement of businesses at the moment.”
Property prices rise
The Russian Central Bank has been prevented from taking advantage of billions of hard currency reserves held in foreign banks. A number of Russian banks have also been excluded from the global SWIFT financial system.
To protect its hard currency reserves, the Russian government imposed capital controls and banned citizens from leaving the country with more than $ 10,000 in their possession.
With the difficulty of transferring cash, many Russian buyers have resorted to paying with cryptocurrencies.
Gulf states, including the United Arab Emirates and Saudi Arabia, have rejected calls from Western governments to impose sanctions on Russia.
The UAE was one of three countries, along with China and India, that stayed in February of a vote at the United Nations condemning Russia’s invasion of Ukraine. It also remained out of the vote in the General Assembly on April 7 to suspend Russia from the United Nations Human Rights Council.
The increase in Russian investment comes months after the United Arab Emirates were placed on the “gray list” of the International Financial Action Task Force, which monitors financial irregularities around the world.
This means that the UAE is witnessing increased oversight in its efforts to combat money laundering and terrorist financing.
The UAE government says it has taken important measures to regulate incoming investment, and has stated that it is committed to working closely with the International Financial Action Task Force for further improvement.