In Dubai, it looks like the Russians are staying

Reuters/Ahmed Jadallah

The Russians are coming! No, they’re going, aren’t they? Maybe the Russians in Dubai are simply staying.

Since the invasion of Ukraine nearly two years ago, one of the most significant forces in the economy of Dubai has been an influx of Russian migrants escaping the consequences of Putin’s “special military operation”.

Mostly young and entrepreneurial, they have been welcomed as a new and vibrant addition to the local economy, but also blamed for rising inflation, especially in real estate prices, as they inflate the property bubble.

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An event on Monday on the Palm Jumeirah (where else?) provided the perfect opportunity to gauge the state of mind of the Russian community in the UAE, and to get some sense of long-term intentions.

Organised by EM, a Russian communications group that has grown fast in the UAE since February 2022, the event brought together Russian business people, local financial professionals and other experts for a one-day deep dive into the Russian economic psyche in exile.

I attended as someone interested in the “Russification” of Dubai – I’ve written about it before on a couple of occasions – but mainly with one question in mind: are the Russians here to stay? Or will they return to their homeland if, or when, there is some resolution to the war in Ukraine, even if just a ceasefire that “freezes” the conflict for the time being?

With the war still raging, and Western sanctions (of dubious deterrence so far to President Putin) if anything intensifying, the Russian presence in the UAE is a sensitive thing. The event was held under the Chatham House rule of no identification or attributed quotation, which I have observed here throughout.

First, some numbers. According to what were called authoritative official sources, late last year some 1.1million Russians had visited the UAE and 700,000 had obtained UAE residency (including dependents).

That sounds accurate to me, and contradicts anecdotal evidence that many Russians were leaving. In fact, visitor numbers have probably risen significantly since then, with many choosing to spend the Russian festive season in the balmy Gulf.

Their presence as big investors in UAE real estate was also confirmed, although still significantly below other nationalities from Asia, who have been the main drivers of rising property values.

A local property expert identified an interesting trend. Russians, he said, were now net sellers in the middle segments of the market – around AED10 million to AED15 million ($2.7 million to $4 million). Many who bought in mid-2022 were sitting on big profits a year later and had decided to sell up. At the luxury end – up to AED100m and above – the Russians were holding on.

Another fascinating angle was in relation to financial markets. Many of the early emigrés were financial professionals worried that the war and Western sanctions would impact their careers and living standards at home.

Some had wanted to continue their stock market businesses in the UAE, in particular by launching a wave of IPOs by Russian companies on UAE stock exchanges.

But the plans took a hit when the Russian bank MTS had its licence revoked last year, showing the jitters of the UAE establishment at anything that might incur Western sanctions.

The entrepreneurs behind the IPO plans are still here, waiting for an official sign to reactivate market flotation plans. One Uzbek company, deemed sufficiently “Russian” to be a test case, is said to be waiting in the wings to launch an IPO later this year – assuming the UAE authorities approve. If not, London is an option.

Banking restrictions on Russians, which were pretty draconian this time last year at the mainstream UAE financial institutions, appear to have eased as the bureaucrats and clients get to know each other’s way of working.

“Being a Russian is not a problem,” one UAE banker said, as long as the individual or company was not sanctioned.

But there was a wistfulness about the event that spoke volumes. The welcome migrants had received in the UAE was genuinely appreciated, and Dubai’s business-friendly environment much praised. Many spoke of their new lives in the UAE, and how their children were thriving.

Some, who had done a lot of business in the West before the invasion, were unhappy those markets seemed to be cut off for the foreseeable future.

One company (looking at an IPO in the UAE to replace its frozen London quote) used to call itself the “biggest in eastern Europe”. Now it marketed itself as “the biggest in western Asia.”

In a telling aside over coffee outside the formal event, one Russian executive admitted to me that as long as Putin remained in power his company would find the West closed, and would have to look instead to new markets, such as the UAE, as a place to do business and store wealth. 

I came away with the distinct feeling that many of the Russians were going to stay in Dubai. And keep their money with them.

Frank Kane is Editor-at-Large of AGBI and an award-winning business journalist. He also acts as a consultant to the Ministry of Energy of Saudi Arabia