Dubai, UAE— Over the past twenty years a small trickle of wealthy Russians arriving in Dubai, and the wider UAE, have made the coastal city a second home.
The imposition of Western sanctions on Russia last year though has seen the trickle of buyers from Russia, and the Commonwealth of Independent States (CIS), a group of nine former Soviet countries spanning Eastern Europe, the Caucasus, and Central Asia, turn into somewhat of a deluge, propelling the Dubai property sales to newer heights.
Much to the chagrin of London and Paris, the cities that saw the exodus of rich Russians after the Russia-Ukraine war erupted, the UAE has remained open for business in spite of international sanctions and asset seizures, benefiting the country financially.
According to Inga Brykulsa, a property consultant at Driven Properties, Dubai, CIS investors have been directed to flee their countries and find a home in Dubai. “They are buying properties in Dubai and even liquidating their assets in other countries and moving those funds over to the UAE.”
Speaking to TRENDS, Brykulsa said that Dubai saw a surge in real estate investment to the tune of US$4 billion in the first quarter of 2022.
“Russian citizens were the nationality with the most non-residential real estate purchases in the quarter,” Brykulsa added.
According to a 2022 report released by Driven Properties, the number of Russians who bought property in Dubai shot up by 164 percent in the first quarter of 2022.
Several well-to-do Russian families are setting up family offices in Dubai in anticipation of the next decade, and most Russian buyers in the city are from the middle-class or above.
The sellers in the Dubai property market have been astonished to see Russians shelling out money in one go to buy property, given the abundance of cash they hold with them. Yet many Russian buyers have made their purchases in cryptocurrency.
Brykulsa told TRENDS that buyers from UK, India, Germany, France, and the US follow closely behind the Russians in terms of buying properties in Dubai. Europeans, Indians, Americans, and Canadians also buy apartments and penthouses in new real estate projects.
The pull for buyers from around the world choosing to invest their money in Dubai, according to Brykulsa, is the city’s status as a safe place and being tax-free.
Furthermore, the property market is bolstered through the UAE government’s initiatives, making Dubai a great place to invest and live.
At the same time, real estate in Dubai offers 8 percent possible rental returns compared to two to three percent in other metropolitan cities like New York and London.
Data from Driven Properties pegs the value of real estate deals in Dubai’s “ultra-luxury” sector at US$ 19 billion between July and September. Off-plan real estate in Dubai’s most desirable neighborhoods is in high demand, driving up prices by up to 50 percent.
Still, Dubai’s tryst with expatriates from Russia did not begin in 2022; it goes back to 20 years.
Vladimir Titorenko, Founder of VBRE Real Estate, said: “Russian speakers have always been comfortable in “investing in their favorite beachfront neighborhoods like JBR and Dubai Marina. However, Russian-speaking investors are now choosing the UAE as a place to remain for a while”.
According to Better Homes Consulting, Russians made up the largest segment of foreign real estate buyers in Dubai last year.
The emirate witnessed more than 86,000 residential real estate sales in 2022, surpassing the record of 80,000 registered in 2009.
In 2022, Dubai achieved record results in real estate deals, with a total value of US$143 billion, according to the Dubai Government Media Office, describing the matter as an “extraordinary” achievement.
It said that the real estate sector in the emirate has posted exceptional results, achieving a growth rate of 44.7 percent in terms of volume, and 76.5 percent in terms of weight compared to 2021.” The real estate sector makes up about a third of Dubai’s economy.
The UAE, in recent years, has been a popular destination for entrepreneurs, skilled workers looking to relocate. In addition, consistent rulemaking updates and the introduction of new visa categories and rules help expand opportunities for people everywhere to relocate to the UAE.
But why did Russian émigrés, deserting London and Paris in the wake of Western sanctions, choose the UAE for a second home?
Titorenko says that for the CIS citizens the UAE has been at the forefront of development for the past two decades.
“From the beginning, Dubai provided only the best. However, due to its rich culture, trade, and ease of conducting business, the city has evolved greatly over the last 40-50 years and is now acknowledged as one of the best cities in the world”.
Talking to TRENDS, he said Dubai offers investors such opportunities and value than no other cities in the world can offer. “Dubai continues to attract like-minded people who want to make a positive change in the world’s markets, which is what Russians love. The cost of entering the real estate market in Dubai is also lower than in most other markets”.
Investing in the UAE is a popular choice among Russians because it is relatively safe, has a high level of transparency, and offers high returns on investment.
For quite some time, the Dubai real estate market has been proving to be a great investment vehicle for anyone seeking growth and yield. Moreover, all processes are now digital, making it simple for investors to keep tabs on everything happening.
As it is well known, most Russians adore the beach; that’s why they are usually interested in buying properties in Dubai’s waterfront communities, villas with parks, and resort-style developments.
At the same time, Titorenko mentioned: “In recent years, a good portion of luxurious residential properties have been bought by the Russian-speaking community.”
Russians have a great deal of experience investing in residential properties, making this a popular asset class among Russian investors. As a result, many seasoned commercial investors are watching Dubai’s market for promising chances.
Russians have considerably impacted the UAE property market, especially in the branded off-plan housing sector. Furthermore, Russians have had a significant impact on the secondary market, which Titorenko considers to be the finest area for investment.