UAE sees surge in new Russian businesses

Reuters/Janis Laizans

• UAE remains neutral in Ukraine conflict
• Russian visitors and property buyers in Emirates have risen sharply
• 34% increase in FDI by Russian companies last year

The UAE has seen a surge in the number of Russian individuals and companies looking to set up businesses in the Emirates, industry experts said.

Opportunities for Russian businesses have been limited since President Vladimir Putin invaded Ukraine last February and western governments including the US, UK and EU imposed sanctions on Moscow.

The Henley Global Citizens Report, which tracks private wealth and global investment migration trends, forecast in June that around 15,000 Russian millionaires would leave the country in 2022, representing about 15 percent of its wealthy community.

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The UAE has remained neutral in the Ukraine conflict, keeping open dialogue and business links with Moscow. With limited options available, Russian tourists, real estate investors and now business owners have been flocking to the Gulf state.

Figures from Dubai Tourism in December showed Russia was the fifth biggest source market for visitors. The number rose 73 percent year-on-year to 938,000 between January and November 2022.

Similarly, property firm Betterhomes reported in July that in the first half of 2022 the number of Russian real estate buyers surged 164 percent year-on-year, as the emirate’s property sector hit record high levels.

Russians are also looking to open businesses in the emirates.

“We get a lot of Russian inquiries,” said Nazar Musa, CEO of Pro Partner Group, a Dubai-based firm that helps businesses set up operations in the UAE, Saudi Arabia, Oman and Qatar.

Pro was bought in May last year by Sovereign Group, a Gibraltar-based corporate services company with 17 offices around the world, so Musa said it needed to do extra due diligence when engaging with Russian clients.

“Because we’re now part of Sovereign Group, which is a financial services group, we are super-careful with our KYC [know your client], with our compliance checks. 

“And it’s unfortunate because I know that there’s only 10 or 5 percent of Russians that maybe leave themselves open to criticism

“We have to do a lot of checking before we accept Russian clients, and the fact that we’re doing so much checking is showing me that there’s a lot of them around.”

Dubai-based CBD Corporate Services, which also helps companies set up in the UAE, said the Emirates “remains open for business with Russian individuals and organisations,” but added that it operated “a thorough due-diligence regime”.

The firm said it had recorded a 34 percent increase in foreign direct investment (FDI) by Russian companies into the UAE in 2022, mainly in the general trading and consulting sectors. Most of the new entrants classed as sole proprietorships and startups.

“Despite the EU sanctions against Russia remaining in place, we still expect FDI and new market entrants to continue an upward trajectory, anticipating Russian businesses to have an additional market share in the UAE of over 20 percent by the end of 2023,” a spokesperson said.