Russian Investment Surge in Dubai’s Real Estate Post Ukraine Invasion
The market is buoyed by Russian investors, who have shoveled $6.3 billion into Dubai’s property market since the Feb. 24 invasion of Ukraine. This, as outlined in a report by the EU Tax Observatory and Norway’s Centre for Tax Research, shows that Russian money has been flowing into the country particularly in Dubai and buying into new as well as under construction property.
Key Findings
- Investment Growth: The influx of Russian investors in Dubai real estate has risen by more than ten times after the invasion.
- Property Purchases: Out of the total capital of $6.3 billion, $2.4 billion was directed to the objects already built and $3.9 billion – to the objects that are being constructed.
- Prominent Buyers: Some of the investors include Russian political and business personnel. For instance, Grigory Anikeev, a deputy of the Russian State Duma, bought a pent
Implications and Risks
This increased flow of foreign investments particularly by Russians appears to be tainted with some form of money laundering and tax evasion. The large numbers of such properties owned by foreign investors make it rather impossible for foreign taxation authorities to track, many of the properties could be unreported for taxation.
The UAE government has affirmed its readiness to protect the credibility of the global financial system and cooperates with other countries to prevent illicit finance. But the volumes of money invested indicate that Dubai is still a popular place for moving money covertly.
Policy Recommendations
To address these concerns, the report recommends:
- Expanding the scope of automatic exchange-of-information partnerships to encompass real estates.
- Building a register of global assets to tackle the problem of the successor link and depraved finance.
- Maintaining international pressure on the UAE to improve the governance and regulation in the nation’s real estate sector.