The Russia-Ukraine conflict puts Dubai real estate on investors’ radar

With the Russia-Ukraine crisis showing no signs of ending, wealthy Russians are making a beeline for safe havens, not only to park their wealth but also to buy both commercial and residential real estate. And the UAE, particularly Dubai, which has always been a popular destination for Russian corporates and tourists, is benefitting majorly from the exodus of Russians as they seek refuge in safer destinations amidst unprecedented Western sanctions. As a result, stakeholders in the real estate ecosystems are smelling an opportunity.

It has been estimated that, after the Russian offensive against Ukraine began on February 24 this year, over 200,000 Russians have left their country, with most of them fleeing to Dubai. In fact, the number of Russians who own real estate in Dubai has quadrupled in two weeks⁽¹⁾. The surge in Russians buying and renting properties in Dubai, with the most popular real estate purchases being in the $250,000-500,000 bracket, is very likely to have a positive impact on the local sector.

Even before the war, Russians were already among the top patrons of Dubai real estate. The numbers have gone up dramatically now. With the UAE refraining from taking sides on the Russia-Ukraine crisis, not imposing sanctions on Russia, and keeping its airspace open for Russian aircraft, those fleeing the country have a real incentive to invest in Dubai real estate, whether they are hedging their portfolios or investing for the long haul. In fact, the situation is such that Russians are even liquidating their crypto assets⁽²⁾ or directly using them to buy real estate in Dubai.

Dubai’s real estate market is witnessing a boom

The presence of wealthy soviet-origin people in Dubai is not a novel phenomenon — they have always been a notable fixture of the oil-rich city, albeit in small numbers. According to estimates⁽³⁾, the numbers stand at approximately 100,000, of which 40,000 are Russian nationals and 15,000 Ukrainian.

With upper-middle-class Russians now looking to safeguard their business and prevent it from dissipating amid the economic meltdown or being appropriated by their government, their march to Dubai continues unabated. The sudden influx can only spell more riches for the real estate market of the city as it opens avenues for property investors, who are also incentivized by the potential high returns on their investment.

The property market of Dubai is already on the upswing. In 2021, it recorded transactions totalling $35 billion, the highest ever since the global financial crisis of 2007-2009⁽⁴⁾. The real estate market bounced back after years of price declines last year as Dubai emerged from the shadow of the COVID-19 pandemic, actively doing away with lockdowns and enacting new policies to attract tourists.

The Dubai Expo 2020 has also helped generate a buzz about the city and its many attractions, including real estate. The residential market, in particular, has been at the forefront of the revival of the real estate sector — it not only outperformed its past levels but also featured among the best-performing real estate markets worldwide.

Another reason why Dubai is so attractive to real estate investors is the fact that buying property in the UAE is much easier than in most other countries. The formalities of buying an apartment or starting a business are minimal, as long as you have the means to buy them.

Moreover, the UAE has more than 40 “free zones”, with most of them being in Dubai, where foreigners can set up or relocate their businesses. The overall ecosystem is pro-business and there are very few bureaucratic hassles when it comes to buying real estate. Additionally, if you invest around $272,000 in real estate, you will get a three-year UAE visa⁽⁵⁾. And if you put in $1.36 million, you can have yourself a five-year visa. Unsurprising then that fleeing Russians looking to escape the war and its aftermath are headed to Dubai in such large numbers. And the real estate sector is in a pole position to capitalize on this influx.