Rubles are the same, but investors are different.

Since the beginning of Russia’s military actions against Ukraine and the following large-scale sanctions of Western countries against the Kremlin, many Russian companies have begun to think about how to save their assets. One of the most popular ways is to move the business to new territories. The United Arab Emirates is among the countries that Russian businessmen rely on. Russian investments can benefit our state, but they need to be treated carefully, all risks must be evaluated so as not to spoil relations with key economic partners.

The UAE and Russia traditionally cooperate effectively in the economic sphere. In 2021, the trade between the countries reached $3.5 billion. Is it a lot? That is not very much, it is about 0.5% of our country’s foreign trade. We also invest in Russia. Back in 2013, the Mubadala Fund created a $2 billion company together with the Russian Direct Investment Fund. After the outbreak of the war in Ukraine, Mubadala stopped investments, but other investors did not cancel their plans. In May the Deputy Minister of Economy of the United Arab Emirates, Abdullah Al Saleh, said that by the end of 2022 UAE investments in Russia will amount to about $1 billion. However, this is also not much: almost 30 times less than we invest in the US.

Russians invest much more money in our country. And with the beginning of the war, this flow increased dramatically. Demand for real estate in the UAE from Russians increased by 336% by the end of April 2022 compared to the same period in 2021, and the number of transactions increased by 67% (according to Betterhomes brokerage). Due to this, Russia has risen from 7th to 5th place in the rating of real estate investors in the UAE.

According to analysts, the Russians are withdrawing money from the sanctions. There are not so many countries where they can transfer them. The West restricts Russian investments and freezes the accounts of Russian oligarchs. There are not so many objects for investments in Russia’s allies Armenia and Kazakhstan. Turkey, especially Istanbul, is also attractive, but the Turkish authorities are wary of Russian money.

The UAE in comparison is famous as a world trade center, we have excellent real estate, we are known throughout the world for our friendly neutral foreign policy and willingness to work with different countries. “We have seen an influx of Russian clients since the start of the war in Ukraine and this has prompted us to set up a special Russian department to serve them,” Michael Kortbavi, partner at BSA law firm Ahmad Bin Hezeem & Associates, told the BBC. As Ryan Mahoney, CEO of Betterhomes, noted, clients from Russia choose to buy real estate in the most prestigious areas of Dubai. They are especially interested in luxury residential complexes overlooking the Arabian Gulf.

Not only Russian billionaires, but also some companies are moving to the Emirates. According to the Russian Forbes, Russian IT industry players and startups are moving their head offices or management structures to the coast of the Arabian Gulf. For some of them Western sanctions, including restrictions on access to modern technology, have actually made it impossible to work in Russia.

But not only technology companies are moving to the UAE. For example, Oleg Tinkov, the former owner of Tinkoff Bank moved there, as well as top managers of his bank Oliver Hughes and Pavel Fedorov. An official statement on the London Stock Exchange says that this is the part of a broader reorganization process in the group, which includes the bank.

Interestingly enough, businessmen related to other banks are also following in the same direction. Tim Dimchenko, the head of the direct investment department at VTB Capital, began moving his personal business to the UAE back in 2014. In the UAE Dimchenko is on the board of Micropolis Robotics, a small company founded in 2014 and positioning itself as a startup developing drones for urban services. For 8 years of existence it has created one prototype of a “robot-cop”, which was presented to the Dubai police. Russians Egor Romanyuk and Alexander Rugaev work with him in the team. It is known about Romanyuk that he is specialized in activist stock exchange transactions. He is also the owner of two Cypriot companies Barna Capital Group and Axima Funds Ltd. Rugaev also worked for a long time in Cyprus, the main offshore for many wealthy Russians, through which they withdraw funds from Russia.

Thus, various assets from Russia are transferred to the UAE, both private and public. The Central Bank of our country has already called on its clients to be careful in transactions with Russian clients because of “increased risks associated with sanctions and restrictive measures imposed by other countries.” At the same time, businessmen from Russia and the United Arab Emirates have vast experience of cooperation and relations between Moscow and Abu Dhabi are still at a good level, despite the growing turbulence in the world, which is already being called the new cold war.