Russia and Ukraine have been engaged in a war for more than a year, and it has changed the course of the entire world. For instance, the rising gas prices and the restricted food supplies are driving inflation levels in almost every other country. In a bit to cripple the Russian economy, the US and EU have placed heavy sanctions.
The West has even cut off Russian banks from the S.W.I.F.T) Society for Worldwide Interbank Financial Telecommunication) payment network. It was to stop Russian banks and the government from making payments through the global financial system.
Before the conflict, the European nations, particularly the UK, were the top location for the Russians to invest their money. But now they have turned their eyes towards Dubai. The hustling and bustling financial hub is an ideal investment location for many people. But how has that impacted the Dubai real estate sector? Let’s discuss it more in this article.
Billions of Dollars Invested in the Dubai Real Estate Sector
The recent boom in the Dubai real estate market has been for many reasons. According to the sales reported by a Metropolitan group, they had made transactions worth UAE dirhams 11 billion ($2.995 billion). This shows a significant increase of around 131% compared to 2021.
Therefore, there was a growing demand for the real estate sector even before the Russia-Ukraine War. But it is safe to say that it was further aggregated as Russian investors wanted to look for new investment avenues following the sanctions by the West.
Additionally, the recent Qatar World Cup and the Dubai Expo held last year also has been the biggest factor in the real estate boom. The region became the center of attention due to these events, leading to more investors entering the market.
Investors became more confident about the government’s handling of the pandemic which brought in additional investments.
Financial Practicalities for Investing in Dubai Market
An important thing to keep in mind is that the UAE did not sanction Russia after it invaded Ukraine. Therefore, Russian investors can transfer money to Dubai-based banks without too much trouble. This way, Russians can easily make purchases in the UAE property market.
However, businesses and individuals looking to invest in the Dubai real estate market must comply with anti-money laundering. These laws would apply to everyone, regardless of their nationalities. Therefore, Russian nationals would be subject to know-your-customer (KYC) regulations and other measures that are in place before the country’s invasion of Ukraine.
Also, the real-estate brokers would need to check the names of the potential buyers against two lists:
- UAE local terrorists list
- UN Security Council Consolidated List
Brokers and agents will get information about the new names that are updated on the lists. If they see the name of their potential buyer on any of the lists, even a slight match, they would have to report this transaction through the GoAML portal.
It is an online portal that is developed by the United Nations but handled by the Ministry of Economy in the UAE. The sole purpose of this portal is to spot any potential money-laundering activities.
What Does the Future Hold For Dubai’s Market?
Comparatively, Dubai still has more affordable properties than other cities in the world, such as London, New York, etc. Additionally, investors believe that the UAE market is yet to reach its peak since the “demand-based push factors” will continue attracting people to Dubai.
This includes the recent war in Ukraine, the cost of living crisis, inflationary pressure globally, and much more. The lavish properties along with the off-plan properties that provide a hedge against interest rates will likely gain more prominence.
The demand for the property has also led to higher rental prices. This means that more people would consider buying properties rather than renting them. As a result, it would also learn to increase the local demand for real estate properties.
Many industry experts believe that the boom in Dubai’s real estate market will continue to stay throughout 2023. If the city can attract new residents and continue to grow on the same trajectory, there isn’t anything stopping it from enjoying several years of growth.