Russia's Elite Flocking To The Gulf Bring In New Business

Membership for the local branch of the AngelsDeck group he heads has surged 10-fold to 300 people since Russian President Vladimir Putin invaded Ukraine in February. Denisov, who arrived in Dubai in 2021, says members are often looking for potential investments in the United Arab Emirates, which Dubai is part of.

Growing interest in the group shows how a steady stream of arrivals from Russia is flowing into the business, financial and cultural life of the UAE. Some Russians are founding new companies there, while others are buying property, making venture bets or setting up branches of their Moscow operations. 

Their investments are providing a financial boost to the country, which the immigration consultancy Henley & Partners says will attract the biggest share of private wealth globally this year. Unlike the US, UK and European Union, the UAE hasn’t placed sanctions on Russia after the war began.

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During an October meeting with Putin in Saint Petersburg, UAE ruler Sheikh Mohammed Bin Zayed Al Nahyan said trade between the two countries has doubled to $5 billion over the last three years, and there are about 4,000 companies with Russian roots working in the Gulf state. 

Alexandra Gerasimova, 30, is one of the founders of Fitmost, a Russian technology provider for fitness companies. She decided to open a company in the UAE similar to the one she has in Russia, which has kept growing even after the war erupted.  

“We were able to build a good business model and planned to attract investment for a quick expansion in Russia. But the investment climate in the country went bad, so we decided to scale up our product in the most suitable market for foreign expansion,” she said about the push into Dubai. 

Vladimir Miasoedov, the 36-year-old founder of CSIRA Vision, a developer of algorithms for artificial intelligence and machine learning, moved to Dubai in March to relocate the company he started in 2021 in Moscow. He picked the emirate over the US or EU as he worried his Russian ties might lead to legal and financial hurdles there.

It’s not just young entrepreneurs. Moscow-based coal producer Suek JSC and Switzerland-registered fertilizer company EuroChem Group AG, both founded by sanctioned Russian billionaire Andrey Melnichenko, are opening local trading units in the UAE, people with knowledge of the matter said earlier this year. The tycoon resigned from the companies’ boards on the back of EU penalties. 

In all, Henley projects the UAE will attract a net inflow of 4,000 millionaires this year, the most of any country, while Russia could lose 15,000 of them. 

The flow of money, however, also poses challenges. Some US officials have warned about the risk of Russians using the Middle Eastern country to evade sanctions. UAE officials have maintained that the nation is independent and follows international law but isn’t obliged to observe penalties imposed by individual jurisdictions like the US and UK. The UAE also says it takes its role in protecting the integrity of the global financial system extremely seriously.

Some of the world’s largest private banks have become more cautious and are doing more due diligence when getting new Russian clients onboard in Dubai, according to people with direct knowledge of the process, who requested anonymity discussing confidential interactions. Bigger financial firms with ties to the US, UK and Europe have been particularly sensitive, conducting enhanced know-your-customer checks to verify the source of funds and paying house visits to prospective customers, they said.

Yet the influx of wealthy Russians into the sun-splashed emirate has proven a bonanza for a smaller cohort of private bankers with higher risk appetite, prompting some to set up new firms catering to Eastern European clients, several of the people said. Services range from financial planning to corporate structuring and citizenship assistance.

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Even before the war, the UAE was gaining momentum as a wealth hub, buoyed by its low tax regime, one of the world’s fastest Covid vaccination rates and booming real estate market. But the Russian arrivals are providing an added boost to those ambitions. Spokespeople for the Dubai government didn't respond to a request for comment.

Financial firms and trading businesses serving Russian clients are seeking to grow their presence in the country. Moscow-based Leon Family Office, which has about $1 billion under management, started a company in the UAE in March to serve wealthy Russian clients. Aspring Capital, an advisor on M&A deals, debt and capital market transactions, set up an office in Dubai the same month. 

The Russian influence extends beyond business: A branch of the Primakov school, popular among Moscow’s elite, opened in August in Abu Dhabi. 

Meanwhile, at the popular DRVN cafe, a two-floor establishment at the Bluewaters island that showcases racing cars, entrepreneurs from Moscow hold meetings regularly. At the neighboring Angel Cakes cafe, people attend lectures in Russian about Renaissance art over breakfast. Anyone homesick can easily find a place to have a banya, the traditional Russian steam bath.

Parts of Dubai that have long had Russian communities are attracting newcomers from the country looking for homes, brokers said. 

“When we opened the office in Dubai we did marketing for Europe and Asia,” said Oleg Torbosov, founder of the Moscow-based Whitewill real estate agency that opened its office in Dubai in the spring of 2021. “In March 2022, we turned off all international advertising because we were washed away by a wave of clients from Russia.”

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