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29 Mar, 2024 09:06

Russians cooling on Dubai – Bloomberg

Property investment has reportedly slowed due to rising rents and daily expenses
Russians cooling on Dubai – Bloomberg

Russians are scaling back their property investments in Dubai due to a rise in local prices and a tighter US sanctions compliance policy in the emirate, Bloomberg reported on Thursday.   

Dubai’s property boom in the years following the Covid-19 pandemic has been one of the fastest in the world, fueled by investor-friendly reforms and a surge in demand. Russians in particular were among the top real estate buyers in the emirate after sanctions imposed over the Ukraine conflict effectively barred them from investing in Western countries.  

Demand from Russia, however, has since slowed as an expat rush into Dubai has driven up rents and daily expenses, Bloomberg reported, citing bankers, executives, and investment experts. Although a massive exodus of Russian capital from Dubai is not expected, the “trendline is going down,” according to Philippe Amarante from Henley & Partners.    

“In fact, some of my Russian clients have either downsized their Dubai real estate assets they bought two years ago, maintain still a small base here, but moved back to Moscow or to other available and very attractive jurisdictions like Mauritius,” he told the outlet.   

Russian individuals and companies have also faced scrutiny from banks in the United Arab Emirates that have come under increased US pressure. Even though the Gulf state hasn’t joined the Western sanctions campaign against Moscow, local lenders are wary of secondary sanctions, the article stated.   

According to Bloomberg, banks including Emirates NBD Bank, Mashreqbank, and First Abu Dhabi Bank have tightened controls on servicing Russian individuals and entities in recent months in a bid to comply with US sanctions.   

US President Joe Biden signed an executive order in December allowing secondary sanctions to be placed on foreign financial institutions suspected of supporting Russia.    

Dubai-based bankers reportedly said while average middle-class Russians who haven’t been sanctioned have largely not faced major issues opening accounts, several sanctioned Russians have been rejected.   

Some Russian nationals with alleged affiliations or connections to sanctioned persons have also faced difficulties operating bank accounts, the outlet said, citing people familiar with the issue.