Why Russian entrepreneurs are leaving Dubai
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Russian businessmen are leaving Dubai en masse. Bloomberg came to this conclusion. Bankers and financial analysts told the publication that the United Arab Emirates has lost its attractiveness for wealthy relocators. According to them, the influx of investment into the country has decreased due to the policies of Dubai credit institutions and rising prices for rental housing.
The problems are not limited to this, Nikolai Andreev, the owner and general director of the Big Jack event agency, told Kommersant FM: “I returned to Moscow. An uncomfortable life in Dubai is three times more expensive than a comfortable life in Moscow. Probably, living comfortably there is for the ultra-rich. The number of business opportunities in Russia is now many times greater. And in order to conduct business, I need to be physically present in Russia, this helps the business. My business in Dubai is related to yachts, I have built it up and can run it remotely. Plus Dubai is logistically very convenient. From there it’s a five-hour flight to any point. I have many examples of people who chose Moscow or St. Petersburg as their main base. But since they have many business contacts and need to meet and intersect, they simply fly to Dubai once a month.
In Dubai, no matter how hard they try, they lose in service. A separate story is interaction with locals and legislation. For example, a faucet is leaking, they tell me a person will arrive at 12, you change all your work plans, but no one comes. When you call him, he answers: “Everything is God’s will.” There are a huge number of people on whom you depend in micro-everyday matters, and you will suffer. And it doesn’t matter how much money you have. What difficulties are there when interacting with banks in Dubai? Over the past three months, one of the largest banks in the UAE has closed more than 6 thousand accounts opened with Russian passports.”
According to Reuters, due to fears of secondary sanctions, First Abu Dhabi Bank and Dubai Islamic Bank blocked several accounts associated with trading in Russian goods. One of the largest credit institutions in the country, Emirates NBD, did the same, writes The Wall Street Journal. This has become a really serious problem only for relocants who have recently arrived in the UAE, notes Sergei Tokarev, Secretary General of the Russian Council of Entrepreneurs in Dubai:
“Businessmen who have been here for a long time—10-15 years—they stay and don’t leave. They worked here and are still working. Because in many ways their business is not related to transfers from Russia to the UAE and vice versa. These companies have already become international, their business goes all over the world. And these companies, even if they have Russian owners, normally receive transfers from many countries around the world to their accounts. Everything here is as it was and remains as if there were no problems.
But another thing is that here you need to provide certain documents, discrepancies in certain payments. There are toughenings, but they are connected not only with Russians, there are about 50 nationalities on the list. This is a global tightening of financial policies in many banks, and not only in the UAE.
Businessmen who arrived not so long ago, or those who are opening a company in Dubai now, they have the most problems, it is more difficult for them to open accounts, they do not have any documents confirming that they were doing business either in Russia or elsewhere somewhere, and banks ask this. But the chances of opening an account under such conditions are probably 50% to 50%. But if you meet a number of requirements and conditions, you can theoretically open accounts, although this is a huge problem.”
Amid the influx of wealthy Russians into the region, as well as crypto-millionaires and bankers from Asia, the real estate market in the United Arab Emirates has shown significant growth. Thus, in August last year, the average cost of housing in the metropolis increased by 20% – this is a record figure for nine years. However, so far this has not led to a noticeable drop in demand from Russians, says Roman Makarov, partner at the NSP law office: “I haven’t noticed an outflow from my clients. The season is ending in the bay, which means it will soon become simply uncomfortable. Moscow in the summer is simply beautiful, and in any case much more comfortable for a Russian person than Dubai.
I wouldn’t be able to say that in two years anything except real estate has risen in price significantly. The demand was fantastically accelerated, including by the Russians in 2022 and 2023, but now it’s not the same. That is, prices are probably on a plateau. If the cost of real estate, the cost of rent, increases, say, twice more, then many expats will be forced to leave Dubai, because this is one of the signs of comfortable living. They don’t need it.
They need to build the same Dubai again in Dubai, only in the desert and sell it at the same stable price, that’s what they want. Therefore, massive construction is underway in Dubai in Dubai Creek Harbor and Dubai Hills, and in other areas. And it increases greatly in size. The same goes for Abu Dhabi.”
There are 40 “free zones” in the United Arab Emirates. Companies registered there do not pay taxes if their turnover does not exceed an amount equal to approximately 9.3 million rubles.
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