Is the Middle East a perennial destination for Russia’s ‘anxious’ wealth?

In the case of Russia, investment is often linked to ‘anxious wealth’—a term describing the distinct social, economic, and political uncertainty surrounding disposable income, coined by John Osburg[ii] in his study of China’s new rich, with important parallels for Russia’s elite too. While forum organizers highlight opportunities across sectors like real estate, trade, technology, tourism, and hospitality, real estate has consistently stood out in the two countries’ investment relationship. Its appeal lies in its relative simplicity, the tendency for private wealth to gravitate toward high-profile investments, and the opacity often associated with its transactions. With tales of Russians trading suitcases for real estate circulating, the Middle East has long been a favoured destination for this anxious capital.

On real estate investments, figures generally speak louder than words, and perceptions often override facts. Yet several numbers routinely do the rounds, with one figure of more than US$6 billion attributed to Russian investments in real estate in key Middle Eastern markets[iii], such as the UAE, particularly Dubai, as well as Türkiye and Egypt. Irrespective of whether such figures can be called astronomical, they surely outweigh Russian investment at other destinations.

A Swedish Institute of International Affairs Brief said that Russian migrant influx in recent years has contributed to an economic upturn in the UAE[iv], particularly in the country’s real estate sector. “Property purchases by Russians surged by 67 percent in the first three months of 2022, driving up demand for luxury villas and apartments,”[v] the Brief claims.

For this reason, Dubai’s real estate is often dubbed the barometer of Russia’s anxious wealth parked in the Middle East. An EUTAX Observatory study presented evidence on the foreign investment scale in Dubai’s residential property market. “Relying on simple assumptions to allocate new property purchases across nationalities, we conservatively estimate that Russians bought up to US$2.4 billion worth of existing properties and a further US$3.9 billion of in-development properties since the [Ukraine] invasion.”[vi] Western sanctions following Russia’s annexation of Crimea in 2014 and the invasion of Ukraine in 2022 have consolidated this flight.

The Dezan Shira and Associates Middle East report lays down the context in which these investments fructify. The study reveals that 700 Russian companies were established in the UAE in 2022[vii], increasing their number to 4,000 presently operating in the country. “With the growth in the number of Russian immigrants, the demand for the services of Russian companies in the UAE has also increased. The number of Russian real estate buyers grew incrementally, as did the number of real estate agencies set up by Russians,”[viii] the study highlighted, adding that Russians purchased real estate in the UAE for over US$500 million in 2022 alone.