Dubai boom: Russian investment, high rents and revitalized projects.

Fourteen years after the financial crisis that brought Dubai to its knees, several large-scale abandoned real estate projects are finally starting to show signs of life, as part of a new economic boom in the city-state. As in previous booms in Dubai, the engine is war. But this time it's Russian investors fleeing because of Moscow's war against Ukraine, not people fleeing conflict zones in the Middle East.

"There are places all over the world where there are real problems and people are looking for safe havens," said Richard Wynd, chief executive of Betterhomes Group, a real estate group in the emirate. "I think it's not only a safe haven for capital, but also for their families. "

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While there are no signs that the market may be in as much trouble as it was in 2009, certain concerns have emerged. Soaring rental prices are worsening pressure on the cost of living for the foreign labor force that powers the emirate's development. Meanwhile, the U.S. Office of U.S. Affairs is worried about the amount of Russian money flowing into the real estate market in the United Arab Emirates' most populous city.

Risks and possible problems with the influx of Russian money

"In theory, there should be a significant reputational risk with the UAE clearly acting as a ready-made bridge, allowing Russian oligarchs to use the Emirates as an" intermediate stopover". ''between the Russian financial system and the Western financial system,'' said Jodi Vittori, a researcher at the Carnegie Endowment for the People who has written extensively about Dubai being a haven for money laundering. "But reality seems to indicate otherwise," she said.

The Dubai government and the UAE Foreign Ministry did not respond to detailed questions posed by The Associated Press.

Changes in the UAE over the past half-century

It's hard to overstate how much the Emirates has changed over the past half-century. Since 1968, the seven sheikhates that make up the UAE have grown from a British protectorate of about 180,000 people to a federation with a population of more than 9.2 million. According to government statistics, Dubai alone is home to 3.5''year, according to real estate firm CBRE. Analysts attribute the growth of the luxury real estate market to wealthy people fleeing pandemic restrictions elsewhere.

Russian money and its impact on the real estate market

Betterhomes, which started here in 1986, saw Russians do more than any other nationality in buying non-residents for the first time last year.

Dubai has a history of looking for business advantages in crises such as the Arab Spring, COVID-19 and now''Russia's war with Ukraine. During the Iran-Iraq war of the 1980s, its new port of Jebel Ali repaired ships damaged by explosions and gunfire in the Persian Gulf. The American wars in Afghanistan and Iraq brought wealthy expatriates to Dubai and the global Emirates. These economic booms also included what the West called dirty money.

Warnings and concerns

There are nevertheless concerns about Russian money flowing into Dubai's real estate market. The Office of U.S. Affairs has issued a warning, claiming that Russian oligarchs may use "highly sophisticated financing methods and opaque ownership structures" to hide illegally obtained''s $20 billion bailout to the city-state. Demolition crews are now demolishing the concrete shell of the Dubai Pearl, although plans for the site are still unclear. Plans to develop Palm Jebel Ali's forgotten twin, Palm Jebel Ali, are also being relaunched. One of the practices that contributed to Dubai's 2009 crisis was speculators buying properties that had not yet been built. "Off-plan" continues to grow.

Hill, who rents and is originally from England, would like to buy a place if market prices go down again. But he's cautious after what he's seen in the metropolis. "Dubai can quickly bankrupt people permanently," Hill said. "I've seen too many people go crazy and then go broke very, very quickly.".