There is a war, there is an energy crisis, the West is preparing for a hard winter, the Chinese economy is slowing down. In the Arabian Peninsula, however, the mood is crisp and full of promise. In the fall, the city gets moving again after the languid, hot summer. But the real estate market has actually never stopped. Brokers have been spending hectic days for months.
The thing that jumps out at them is the influx of Russian buyers. In the first half of 2022, the Economist reports, Russians bought more than twice as many houses in Dubai as in the whole of 2021.
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The neutrality card
It’s not hard to see why. War breaks out in Ukraine and Dubai remains neutral (along with all the other Emirates). No sanctions, and moneyed Russians change address. Goodbye London, welcome to the oasis built in the desert. Dubai, a great free port amid divisions and geopolitical upheaval.
The city was in a good position even before Russia invaded Ukraine. Other financial centers were losing their luster. Hong Kong increasingly unattractive, sucked into the Chinese orbit and crippled by long restrictions against Covid-19.
London, somewhat downhill from Brexit, closed its doors to Russian capital, reversing a decades-old policy of welcoming it. In Dubai, banking restrictions are no obstacle, the stock market is racking up successes. The stock market is up 9 percent this year.
Large companies, both local and multinational, are moving their operations there. Banks such as Goldman Sachs and Bank of America have moved employees who used to reside in Moscow to the city.
Weak regulations, lax enforcement
Dubai’s real estate market, condominiums and artificial islands are a perfect way to launder dough. Weak regulations and lax enforcement mean that you can buy without much scrutiny.
Money laundering also happens through trade, because there are 30 free trade zones in Dubai. These, along with minimal customs supervision, allow companies to disguise the proceeds of crime through false documents and multiple or inflated invoicing of goods.
And many migrant workers, employed in the most menial real estate and service jobs, are also often treated as commodities.
American irritation
The United States, at least in words, is beginning to sound a bit impatient. Their officials and diplomats could not fail to notice that oligarchs close to Putin are docking and landing in Dubai, with huge jets and yachts.
The UAE is one of Washington’s closest partners in the region, and in theory should not offer such conspicuous loopholes to Western sanctions against Russia.
The Emirates, for its part, assured cooperation. Is this really the case? Companies involved in opening businesses and obtaining visas for new Russian residents say the controls are there, often delaying even the opening of accounts and the transfer of money. But many individuals, especially the wealthier ones, overcome these obstacles easily and start their businesses without much fuss.
The fossil fuel game
In the midst of the largest hydrocarbon producers, Dubai has chosen a different path. In a sense, it has projected itself into the future. Oil production once accounted for half of its GDP, today just 1 percent. But gas and oil are still the present for the Gulf countries.
They, too, are investing in clean energy and envisioning, in the long run, an alternative economy to fossil fuels. Not yet, however. If the war in Ukraine rewards Dubai’s openness, it is also reshaping the world’s fossil fuel markets. And the Gulf will be the big winner.
Read also: Why is Dubai a strategic guide for the growth of the entire Gulf region
