Russian Millionaires Escape to Dubai

Dubai has been gaining ground as a sanctuary for wealthy Russians fleeing the brunt of sanctions over the Ukraine War.

Russian billionaires and businessmen have been arriving in the UAE in record numbers, executives told the BBC.

Real estate purchases in Dubai by Russians grew by 67% in the first quarter of 2022, according to a report.

The UAE did not impose sanctions on Russia or criticize the invasion of Ukraine.

The country has also offered visas to Russians not on sanctions lists, while many wealthy countries in the Northern Hemisphere have restricted the group’s entry.

Hundreds of thousands of people are estimated to have left Russia in the past two months — although exact figures are not available.

A Russian economist said about 200,000 Russians left the country in the first ten days of the war.

Virtuzone, which helps companies set up shop in Dubai, has seen a huge increase in Russian customers. “We’ve been getting five times as many requests from Russians since the war started,” said chief executive George Hojeige.

“They are worried about the coming economic crisis. That’s why they are coming here to protect their wealth,” he added.

The arrival of Russians boosted demand for luxury apartments and condos in the city. Real estate agents report a rise in property prices as Russians look for homes to buy in Dubai.

Dubai real estate company Betterhomes says real estate purchases by Russians were two-thirds higher in the first three months of 2022.

And another realtor, Modern Living, told the BBC it had hired many Russian-speaking brokers to meet the growing demand. Executive Thiago Caldas said the company is receiving many calls from Russians who want to move to Dubai immediately.

“Russians who are arriving are not buying just as an investment, they are seeing Dubai as a second home,” he said.

‘Brain Drain’

Many Russian multinational companies and start-ups are also relocating their employees to the UAE.

Fuad Fatullaev is the co-founder of WeWay — a blockchain technology company that had offices in Russia and Ukraine. After the start of the war, he and his partners relocated hundreds of employees to Dubai.

“The war had a tremendous impact on our operations. We couldn’t continue (as we were) because we had to get hundreds of people out of Ukraine and Russia,” says Fuad, who is a Russian citizen.

He claims that the company chose to take employees to the United Arab Emirates because the country offers a safe economic and political environment to operate business.

He stated that Russian companies are leaving Russia because of immense difficulties in operating with the sanctions. The challenge is even greater for companies dealing with foreign customers and brands, as many European and American companies have severed ties with Russian companies, he says.

Global companies such as Goldman Sachs, JP Morgan and Google have closed offices in Russia and are also moving some of their employees to Dubai.

“There’s definitely a brain drain going on. A lot of people are leaving because there are a lot of restrictions on business right now,” says Fatulley.

Rising property prices

Russia’s central bank is barred from moving the billions in international currencies it holds in foreign banks. Some Russian banks were even removed from the Swift financial system.

To protect its reserves, the Russian government has imposed capital restrictions and banned citizens from leaving the country with more than $10,000 in foreign currency.

As it is difficult to transfer money, many Russian buyers are making payments with cryptocurrencies. Some have used intermediaries, who take payment in cryptocurrencies and pass the money to the seller on behalf of the buyer.

Gulf countries — including the United Arab Emirates and Saudi Arabia — have rejected calls by European powers to impose sanctions on Russia.

The Emirates was one of only three countries, alongside China and India, to abstain in a UN Security Council vote in February to condemn the Russian invasion of Ukraine. The country also abstained in a vote at the UN General Assembly on April 7 to suspend Russia from the Human Rights Council.

The growth in Russian investments comes a few months after the Emirates were placed on the “grey list” by the FATF (Financial Action Task Force), a global organization that monitors financial crimes.

This means that the country will be scrutinized with greater scrutiny for its actions to prevent money laundering and terrorist financing. The UAE government says it has taken significant steps to regulate foreign investment, and says it remains committed to working with FATF in other sectors to improve.