RUSSIAN OLIGARCHS IN DESPERATE SEARCH FOR HOMES IN DUBAI`SWANKY NEIGHBORHOOD. 

 

 

In Dubai’s swankiest neighborhoods, property brokers say inquiries from Russians looking for villas and apartments are skyrocketing. Among them: Roman Abramovich, the tycoon who owns Chelsea Football Club.

 

 

While the Russian billionaire’s present whereabouts aren’t publicly known, he has in recent weeks been house hunting on Dubai’s Palm Jumeirah, a man-made, palm-shaped island dotted with luxury residences, according to people familiar with the matter.

 

The tycoon’s interest in the emirate is the latest sign of how more and more Russians are flocking to the city state as other favored jurisdictions increasingly sanction and shun some of their compatriots.

 

Lawyers for Russian businessmen say some are attempting to move assets to the United Arab Emirates, of which Dubai is a part. Specialist aviation sites have identified jets belonging to Russian tycoons, including that of Abramovich, coming to the city, though it is not known who was actually on board. The U.K. and European Union have placed sanctions on Abramovich, but there are none imposed by the UAE.

 

Luxury properties on the waterside of the of Dubai. The UAE has taken a careful political position aimed at maintaining its ties with Russia, surprising Western officials. The Gulf state abstained on a U.S.-led resolution in late February to condemn Russia’s invasion of Ukraine at the U.N. Security Council, saying the outcome of the vote was a foregone conclusion.

 

While superyachts, property and jets with believed ties to the Kremlin are being seized across Europe, direct flights are still landing from Moscow in Dubai, where no sanctions are being rolled out.

 

“In Dubai there’s an old saying that goes: when the region does well, we do well, but when there’s a crisis, we do really well,” said Chirag Shah, the founder of the consultancy 1 International FinCentre Associates, who was previously the chief strategy and business development officer at Dubai’s financial free zone, speaking broadly about the city’s ability to navigate global upheaval from wars to politics to the coronavirus pandemic.

 

But the outrage over Russian President Vladimir Putin’s actions is also drawing unwanted attention to the hub’s open door policy.

 

Even before the Ukraine war, the UAE was in the spotlight over its international money flows. The global financial crimes watchdog, the Financial Action Task Force, earlier this month placed the country on its gray list, which means it’s among jurisdictions such as Panama and South Sudan that FATF says don’t do enough to counter dirty money flows.

 

Now the money flowing in from Moscow has left some U.S. Treasury officials concerned that CIPS — the Chinese cross-border yuan payment system seen as a potential rival to the global SWIFT transaction messaging system — may be turning into a key vehicle for Russians to route their money to the UAE using the offshore Chinese yuan to circumvent U.S. sanctions, people familiar with the matter said. Executives and spokespeople at Shanghai-based CIPS Co. and the U.S. Treasury Department didn’t respond to requests for comment.

 

Representatives for the Dubai and UAE governments didn’t respond to requests for comment. The UAE government has said that it’s made significant progress in strengthening regulation of financial

 

Repeated efforts to reach Abramovich weren’t successful. An associate who acted as his liaison with the media in the past declined to answer questions, saying only that she isn’t a dedicated spokesperson and that his press office would be in touch if it had a comment. Calls and a text message to the London number she provided for his press office weren’t answered.

 

An Abramovich spokesperson said in a Feb. 28 statement that the tycoon was trying to help broker an end to the war. The Wall Street Journal reported this week — citing people familiar with the situation that it didn’t identify — that Ukraine’s President Volodymyr Zelenskiy had advised President Joe Biden to hold off sanctioning Abramovich because he might prove a useful go-between in efforts to negotiate peace.

 

Where Are Russia’s Rich Right Now. One of Abramovich’s private jets has been in Dubai in March, according to data from ADS-B Exchange, a plane-tracking website.

 

Dubai is already a favored destination for many Russians, pulling in tens of thousands of Russian tourists every month. Russian ice-cream is on sale at the city’s popular La Mer beach-side development. Delicacies like Russian-style sour cream and cottage cheese are available at some grocery stores.

 

Even Russians with transparent sources of income and without links to state authorities are afraid that they will be lumped together with sanctioned businessmen or that their assets could be taken away, said Daria Nevskaya, a partner at the Moscow-based lawfirm FTL Advisers, which serves wealthy Russians. Some rich Russians are trying to restructure ownership of their assets “so that they are not subject to a witch hunt,” she said.

 

Nevskaya recently arrived in Dubai herself because the firm has seen a surge in demand from Russians to register companies in the UAE to hold their assets, including financial ones, she said.

 

Since the Ukraine invasion, Dubai’s geographic location between east and west, its speedy work visas and well-developed infrastructure have made it attractive to not just rich Russian businessmen but also prominent global employers. In recent weeks, Goldman Sachs Group Inc. moved staff to the Gulf hub from Moscow in response to the invasion, people familiar with the matter have said. Visa Inc.’s chief executive officer said Tuesday that the firm had relocated more than 100 employees and their families from Russia to Dubai.

 

Such moves come after the Middle Eastern hub made big gains drawing new business and investors with its Covid response. In the past few months, the UAE has ranked among the top three places on Bloomberg’s Covid Resilience Ranking thanks to its high vaccination rate, open travel routes and relatively contained virus outbreaks. Dubai also announced a series of reforms during the pandemic to burnish its credentials as a finance center, handing out thousands of long-term visas to executives in a bid to tie them longer to the emirate

 

That helped the emirate’s financial free zone, the Dubai International Financial Centre, attract nearly a thousand new company registrations in 2021, a record. It also posted its highest ever revenue and operating profit.

 

Veteran emerging markets investor Mark Mobius moved his base permanently to the Persian Gulf city from Singapore after the Asian nation put in strict travel restrictions during the pandemic.

 

“I never thought of living here, it was an investment,” Mobius said about visiting Franklin Templeton’s office here for years and buying himself two properties with views of the world’s tallest tower more than a decade ago. “Now we see it’s become a global center,” he said from the lobby of his Dubai residence overlooking an infinity pool and the world’s largest ferris wheel.

 

The increasing appeal to rich Russians is also evident. Demand from Russians for Dubai property is up 40% so far in March compared with February, the Russian newspaper Kommersant reported, citing real estate firm Golden Brown Group.

 

Nevskaya, the lawyer, said a popular way for Russians to obtain a residence visa in the emirate is via the purchase of real estate worth 5 million dirhams ($1.5 million), while a cheaper option is to obtain a residence visa by opening a company.

 

“If we talk in absolute numbers about UAE residency, the demand has increased by 100%” from Russians, said Polina Kuleshova from residency and citizenship advisory firm Henley & Partners.

 

A Russian influx will bolster Dubai’s heft but there’s also the risk it complicates relationships with long-time allies like the U.S., people familiar with the matter have said. The U.S. Treasury Department sent two senior delegations to the UAE late last year to deliver a warning to the country, saying it weakened Washington’s global sanctions programs.

 

At the same time, other destinations are also attracting Russian citizens. In Israel, realtors and immigration lawyers have said they are fielding enquiries from thousands of Russians who have Jewish heritage.