Booming Dubai property “sanction-free” as Russian interest grows

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Booming Dubai property “sanction-free” as Russian interest grows

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At over 160 floors, the Burj Khalifa is 2,716 feet tall, which is more than double the 1,250-foot-tall Empire State Building in New York City.

Fraser Room | The image bank | Getty Images

DUBAI, United Arab Emirates – Emirati real estate tycoon Hussain Sajwani is going high after a record start to the year for Dubai’s real estate market.

“Dubai is doing very well,” the veteran real estate developer told CNBC on Wednesday. “The way Dubai handled Covid has been a key factor in the market boom now.”

According to real estate firm Savills, Dubai recorded $ 35 billion worth of real estate transactions in 2021, the highest since the global financial crisis. A separate report from CBRE says total transaction volumes are now hitting the highest level ever recorded for the first two months of this year.

Sajwani said the UAE, which has long been a popular destination for Russian wealth and tourism, will benefit from the fact that Russians will seek refuge in the UAE and a safe haven for their fortunes amidst the war. ongoing in Ukraine and unprecedented Western sanctions.

“I’m sure a lot of Russians are trying to solve their problems and problems, but Dubai will ultimately benefit from any crisis,” he said. It comes after the UAE, which has ever closer ties with Russia, decided not to match the sanctions imposed by Western nations on Russia for its invasion of Ukraine.

“I’ll be honest with you, these sanctions … have made a lot of people nervous,” Sajwani said. “If someone brings money through the banking system here legally and professionally, we will do business with him.”

The Russians were among the top buyers of real estate before the war and sanctions, according to a recent Reuters report, which also stated that the Russians were buying property in Dubai and even using cryptocurrencies as a means of getting their money to the Gulf state.

The country’s real estate market would also have been a common channel for money laundering, experts said, where people who avoided sanctions or tried to park illegally obtained wealth were able to funnel their money.

The UAE was placed on a financial crime watchdog’s “gray list” earlier this month out of concern that the Gulf country is not sufficiently curbing illegal financial activities. Concerns about money laundering and illicit financial flows prompted the Financial Action Task Force, set up by the Group of 7 Economies, to put the UAE on a monitoring list along with Turkey, Jordan, Pakistan and others.

In response to the designation, the UAE said it takes its role in protecting financial integrity “extremely seriously and will work closely with the FATF to quickly remedy identified areas for improvement.”

Covid response key

Sajwani said progress on the nuclear deal with Iran would also be a favorable wind. “If the Iranian-American peace treaty, the nuclear treaty, were to happen, it would be a big plus for Dubai,” she said. “You will see much more stability and peace in the region,” she added.

Dubai’s real estate market reversed several years of falling prices last year as the city avoided lockdowns, increased vaccinations, and adopted new policies to attract tourists and residents as the pandemic shut down the rest of the world.

The long-awaited Dubai Expo 2020, delayed by a year due to the pandemic, also helped attract interest as the multi-billion dollar project aims to become a new residential and commercial complex after the event ends in April. Whether Expo will become the new thriving city within a city that its developers have planned, however, is yet to be seen.

“The Dubai residential market was the manifesto of the rebound in real estate demand in 2021,” said Savills. “The city’s residential market not only outperformed its past activity levels, it was among the best performing markets globally.”

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