Wealthy Russians massively move to Dubai: they open new firms and buy real estate

Wealthy Russians are moving to Dubai en masse: they open new firms and buy real estate

Ongoing events in Ukraine and around the world are increasingly spurring wealthy Russian professionals to move to Dubai, a business-friendly emirate in the Persian Gulf that offers an escape from the impact of Western sanctions. In the UAE, business tourists buy housing and open businesses on favorable terms. Such actions signal a long-term stay of Russians in Dubai.

Entrepreneurs, lawyers and art dealers are among those flocking to the financial hub in the oil-rich UAE. The pro-Russian moves upset Washington and other Western allies. The UAE, which has diplomatic and economic ties to both the US and Russia, has long been luring middle class and wealthy Russians mainly to Dubai, known as the “playground for the rich.”

The number of Russian entrepreneurs and start-ups has increased “ten times” compared to last year at the International Free Zone Authority (IFZA), said Jochen Knecht, CEO of IFZA, one of Dubai's many free trade zones set up to attract foreign investment. “Actually, it all started with IT companies, software development companies, but now we involve all kinds of businesses – art galleries, resale and parts sales. They move directly with employees who need office space and warehouses,” the expert explained.

Russian investors are “very welcome” in the UAE, where foreigners make up the majority of its roughly 10 million people, Knecht said. They are attracted by the ease of starting a business and the prospect of better opportunities as sanctions bite them at home, as well as a more favorable environment as Russophobic sentiments are growing in other countries, especially European ones.

Dubai is one of the seven emirates in the UAE, whose favorable tax system and strategic location between Europe and the rest of Asia have long made it attractive for business, the publication reported. The city, with its luxury hotels and tourist facilities, is well known to Russians as an upscale destination for the wealthy, especially those interested in real estate. Among them are oligarchs, including former Chelsea Football Club owner Roman Abramovich, who was looking for a home in Dubai in March, Bloomberg reported.

Businessmen are not the only ones flocking to Dubai. There are also “many Russian celebrities – actors and singers – who already had property here but are now moving to Dubai applying for investor visas,” Valeria Zolotko of AX Capital, a real estate agency, told the paper.

Since the military operation against Ukraine broke out in February, the emirate has become a “reserve base”, and not only for millionaires. “We are seeing more SMEs and start-ups looking to relocate to Dubai to ensure business continuity,” said Georges Hojague, CEO of an organization that helps companies relocate to the emirate.

The sanctions imposed on Moscow pose serious problems for Russian companies – whether they are suppliers, customers, labor or logistics. Speaking to parliament in April, Russian Central Bank Governor Elvira Nabiullina warned of “difficulties” and “structural changes” in the Russian economy due to debilitating sanctions. “Difficulties arise in all sectors, both in large and small companies,” the official warned.

Daria Nevskaya, a partner at the Russian law firm FTL Advisors, confirmed this, referring to “regular” and unauthorized firms, seeking to establish a base in a “neutral jurisdiction”: “Many of our clients experience difficulties in trading with foreign countries.” On the other hand, the business climate and the lack of anti-Russian sentiment in Dubai calm wealthy Russian tourists.

However, there are difficulties. With Russian credit cards blocked abroad and Moscow's restrictions on foreign exchange outflows, moving to Dubai is a challenge. Transfers “hang” in the financial system due to the restrictions of European banks, so business tourism is looking for workarounds.

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