Real Estate

Russians snap up plots of land to build ‘Little Moscow’ in Dubai

September 20, 2023, 4:39 AM

Passengers on the Ain Dubai wheel look out over Palm Jumeirah – now a popular spot for Russian property investors

Emirates Hills, Dubai Hills, Palm Jumeirah favoured
‘Clusters’ of villas and apartments bought up
Influx of ‘Russians with expertise in construction’

Russian investors in Dubai are working to become real estate developers or acquire clusters of homes to build “Little Moscow” communities in the emirate.

Buyers from Russia have become big investors in Dubai property since sanctions imposed on Moscow locked them out of European and North American markets.

The UAE has also become a key destination for Russian tourists and investors since President Vladimir Putin launched his full-scale invasion of Ukraine in February 2022.

Aleksandr Timofeev, off-plan client manager at Betterhomes, told AGBI he had seen a “noticeable surge” in interest from Russian investors seeking plots of land to construct lavish villas or mansions.

He said Russian clients were particularly drawn to exclusive locations such as Emirates Hills, Dubai Hills and Palm Jumeirah, “where they can enjoy privacy and luxury within affluent neighbourhoods”. Average plot prices in these districts are around AED50 million ($13.6 million), according to Timofeev.

He added: “There has also been an influx of affluent Russians with expertise in the construction industry.

“Many of them are keen on developing distinctive residential buildings and hotels, [and] raising the bar for construction quality in Dubai. Some investors are opting for a strategy of acquiring multiple townhouses and villas, renovating them and subsequently selling them for profit.”

Interior of the "Marble Palace" in Emirates Hill – another ultra-luxe district popular with Russians. The mansion is reportedly valued at $204m — Interior of the “Marble Palace” in Emirates Hill – another ultra-luxe district favoured by Russians. The mansion is reportedly valued at $204m

Residential property prices in the emirate rose at their fastest rate in almost a decade in the first half of 2023, climbing 16.9 percent year on year. Villas topped previous records set in 2014.

Betterhomes in July reported that, in the second quarter of this year, Russians were No 3 in the list of largest buyers in Dubai by nationality, behind Indians and Britons.

Nick Maclean, managing director of property consultancy CBRE Mena, told AGBI this week that some research suggests Russians have now become the single largest nationality.

“I would expect some to enter the development market, subject to them being able to continue to export their capital from Russia,” he said.

“The nationality restriction on ownership in some areas will mean that they are likely to want to partner with Emirati investors as well.”

Sidharth Kumar, a real estate agent at Valcom Properties, said one of his clients was the daughter of a prominent developer in Russia. She is reportedly eyeing plots in Dubai to build a community of 10 to 15 villas.

“Her father gave her money to develop real estate projects in Dubai,” Kumar said.

Another property consultant, who declined to be named, said he had been tasked with locating “clusters” of villas and apartments for his Russian clients.

“One client has bought multiple rows of villas in a community in Dubai,” he said.

“They are willing to pay quite a bit extra to find homes next to each other to rent only to Russian nationals. One client told me they feel safer living together. He asked me to find a shop to rent in the community, to open a supermarket for Russian food so people feel at home.”

An expat called Dmitriy celebrates his birthday at Chalet Berezka, a Russian bar and restaurant in Palm Jumeirah

Vinayak Mahtani, CEO of holiday homes business bnbme, said his company had also seen Russian investors acquiring homes in clusters, in areas such as Jumeirah Village Circle and Business Bay, to let and “get economies of scale”.

“They will pick up a full floor or 10 apartments and give it to us to manage,” he said.

Akshay Jayaprakasan, an associate partner at research company Redseer Consulting, told AGBI in July that Russians were more likely than other investors to buy instead of renting.

Their average spend on a property is nearly double that of other nationalities, at $1.1 million, he said.