How wealthy Russians are affecting real estate prices in UAE as they search for a second home

Sales of luxury villas and premium flats have been booming in Dubai, pushing prices to new highs. The booming business in the real estate sector has been triggered by non-sanctioned Russians who are fleeing their home country amid the threat of an economic meltdown. Property purchases by Russians in Dubai increased by 67% between January and March, as per a BBC report.

 

The trend of greater Russian arrivals was witnessed since March 2022. The gulf country is drawing wealthy Russians as UAE has not taken sides in the Russia-Ukraine conflict. UAE had abstained in a United Nations Security Council vote in February to condemn Russia's invasion of Ukraine. It also abstained in a General Assembly vote on 7 April to suspend Russia from the UN Human Rights Council.

 

Gulf states like UAE and Saudi Arabia have rejected calls of Western nations to sanction Russia, so its citizens are moving there hoping their money will be safe.

 

 

The affluent Russians are looking for homes in the $250,000-$500,000 bracket, as per a TRT World report. Apartments in the affluent neighbourhood of the Dubai Marina are a popular choice. TRT quoted an agent who claimed that “some are even paying a year’s rent in advance”.

 

Clearly, they are looking to hunker down there as the war unfolds in Russia.

 

While there is no exact figure on the number of Russians in UAE, the evidence from a large number of enquiries from Russians for homes and business setups indicates that the migration is huge. Overall, it is estimated that hundreds of thousands of people have left Russia over the last two months.

 

The Russians in UAE are looking for a second permanent home in Dubai for themselves and their businesses. Many start-ups have also relocated to Dubai as it became increasingly hard for them to operate amid the sanctions. Those that dealt with international clients and brands were hit hardest, since most western companies snapped ties. So, moving to UAE made sense. Many global firms like Goldman Sachs, JP Morgan, and Google that shut down in Russia are also shifting employees to UAE.

 

 

Russia’s Central Bank has been cut off from its $630 billion chests of foreign reserves. Some of the country’s banks are disconnected from the SWIFT financial messaging system. Russia has enacted capital controls and banned citizens from exiting the country with more than $10,000 in foreign currency in order to protect its reserves.

 

Some have found a way around this problem too, relying on cryptocurrency to make the purchases. Some of the purchasers have an intermediary whom they pay in crypto, and who then converts that to cash to pay the seller on behalf of the buyer, BBC reports.

 

 

While the UAE does business with Russia, some of the money coming into the gulf country is believed to be from sanctioned Russians. Earlier in March, UAE was grey-listed by the global financial crimes watchdog, the Financial Action Task Force.

 

This put the lens on the money that flows into the country, where many transactions are reportedly made in cash. The FATF listing indicates that some of these transactions aid money launderers. The government has said that it is looking to work closely with the FATF to “remedy the identified areas of concern.”

 

The UAE’s real estate sector is known to be funded by foreign money. In its 2020 report, the FATF noted that the country had not taken significant steps to monitor its real estate agents.