Dubai has emerged as a top destination for Russians and their capital in 2022, but the emirate’s appeal is now waning as the cost of living there rises and banks tighten their compliance with US sanctions. The flow of Russian money into the UAE is showing signs of slowing, bankers and investment professionals told Bloomberg. None of them predict a large-scale outflow of money from the UAE, but according to experts interviewed by the agency, the country seems to already be getting the maximum benefit from Russian money. Some Russians are considering moving to new jurisdictions or even returning home as an influx of expats to Dubai pushes up rents and daily expenses. And although the UAE has not imposed its own sanctions against Russia, it is becoming increasingly difficult for Russian organizations to open accounts in local banks, which are increasingly under pressure from the United States. Philippe Amarante, head of the Middle East department at investment immigration firm Henley & Partners, said some of his Russian clients had downsized their Dubai properties bought two years ago. Others returned to Moscow or moved to other accessible and highly attractive jurisdictions such as Mauritius, maintaining only a small base in the UAE. According to the agency’s interlocutors, UAE banks, including Emirates NBD Bank PJSC, Mashreqbank PSC and First Abu Dhabi Bank PJSC, have tightened control over Russian structures and in recent months have tried to ensure stricter compliance with US sanctions. Some Russians who themselves were subject to sanctions or were in some way associated with such people were refused to open accounts by Dubai banks. In the spring of 2022, Dubai real estate agencies reported an increase in inquiries from wealthy Russians hunting for real estate in the most luxurious areas of the emirate. According to Dubai broker Betterhomes, at the end of 2022, holders of Russian passports took first place in the ranking of real estate buyers, but last year they dropped to third place, behind citizens of India and the UK. The exodus of wealthy Russians will not have much impact on the UAE’s economy as there is interest from their counterparts in other parts of the world, says Steffen Hertog, associate professor at the London School of Economics. “However, the impact on Dubai will be slightly greater than on Abu Dhabi due to its greater dependence on foreign investment and real estate,” he said. At the moment, the Russians are not ready to completely leave the UAE. Aluminum producer United Co. At the end of last year, PJSC Rusal International moved its global business operations to Dubai. Oil traders also continue to favor the UAE, using the dirham as a convenient alternative to the dollar. But even this cohort has faced stricter scrutiny since October, when the United States stepped up enforcement of its sanctions to curb oil prices. The Russians are well established in Dubai. They now have their own medical facilities, dentists and football academy in the emirate. However, all this does not convince those people who have already “sharpened their skis” in other directions to stay. “It’s like an airport cafe where everyone is just waiting for the next flight,” one explained.
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