DUBAI—More than 30 charter flights a day bring sports stars, tech millionaires, and influencers to this Persian Gulf emirate’s primary private-jet airport, where traffic has tripled in the last three years. Fliers are handed macarons and cappuccinos with their faces frothed up.
They arrive in a city where real estate prices have skyrocketed, the Michelin Guide has only recently begun rating restaurants, and Beyoncé sang at the grandiose launch of Atlantis the Royal, a hotel that bills itself as the world’s “most ultraluxury” resort, with rates starting at $37,000 per night.
In Riyadh, soccer star Cristiano Ronaldo is living in the penthouse suite of the historic Kingdom Tower with his fiancée and their children, who are learning Arabic. Ronaldo joined a Saudi club in December for an estimated $200 million per year. He’s been seen driving around town in a Bentley.
The oil-rich Gulf is becoming a magnet for global wealth, attracting European bankers, American hedge-fund managers, and Israeli tech founders to countries with zero income taxes and a thriving food, sports, and arts scene.
The growth is primarily concentrated in the United Arab Emirates and Saudi Arabia, but Qatar is also participating. Still giddy from a FIFA World Cup that introduced many Westerners to the Middle East for the first time, Qatar welcomes a steady stream of delegations from Europe and Asia, reinforcing its status as the go-to market for countries looking for additional natural gas supplies.
The Gulf economy and state budgets have benefited from the Ukraine crisis, which has resulted in high crude prices and rerouted global movements of people, commodities, and capital. Incoming Russian nationals and money have fueled Dubai’s real-estate market, and the city has emerged as a crucial gateway for Western goods into Russia.
The United Arab Emirates and Saudi Arabia are looking for methods to keep the boom going even if oil prices fall. They are liberalizing their economy through looser immigration rules and regulations that are less reliant on Islamic tenets, inviting more visitors and foreign employees from all over the world—though major limitations remain.
According to the International Monetary Fund, Saudi Arabia, the region’s largest economy, had the greatest GDP growth among major economies last year, and 2023 is predicted to be another profitable year for the world’s largest oil exporter. The UAE increased at 7.6%, while Qatar grew at 4.8%, the fastest rate in over a decade.
According to CBRE Group, an American commercial real-estate services and investment firm, rents in Dubai have increased by more than 25% in the last year, and the volume of property deals is at an all-time high. Russian investment in beachfront villas and skyscrapers has increased as a result of commercial flights to Moscow and the tightening of Western sanctions.
Free expression in the region remains highly restricted, and governments are opaque. Autocratic rule has produced a fearful environment, which sometimes prohibits local counsel or highly paid foreign experts from providing candid advice. According to Human Rights Watch, dozens of ordinary Saudis have been jailed and sentenced to decades in prison for online criticism of the crown prince’s policies, while more than 50 Emiratis who were jailed for criticizing the government remain incarcerated after serving their sentences.
The upswing has given some impetus to social reform. The United Arab Emirates, where 90% of the population is foreign, has reduced alcohol fees, allowed unmarried couples to live together, and offered new visas to encourage individuals to stay longer. The country has decriminalized bringing marijuana into the country and has stated that its next step will be to establish casinos.
New Flurry
The Gulf has already experienced oil booms, with crude prices rising above $100 per barrel. Monarchs either invested billions of dollars in white-elephant projects that were never finished or distributed cash to citizens in order to garner support.
This surge is unique, according to officials and experts. It is the first since the 2015 Paris agreement expedited the West’s transition to renewable energy, a shift that surprised Gulf petrostates and convinced them that they needed to invest fossil-fuel earnings now in order to diversify their economies.
Oil prices climbed above $120 per barrel last year, but have since fallen to around $76.
Gulf states are taking more risks rather than simply storing their oil wealth in Western bond and equities markets. Their sovereign-wealth funds are investing tens of billions of dollars in domestic and international markets. According to Global SWF, a research group, five of the top ten state-owned investors last year—made up of sovereign-wealth vehicles and pension funds—were from the Gulf.
According to economists, a global economic recession will continue to harm, sapping demand for countries that rely on energy markets. Other dangers include extravagant spending that rivals earlier booms. Saudi Arabia alone has plans for a 1,700-foot-tall, 75-mile-long skyscraper, an airport that seeks to become one of the world’s busiest international hubs, and a new downtown Riyadh centered on a 1,300-foot-tall cube.
The absence of income taxes has aided Dubai in attracting software workers and hedge-fund employees from San Francisco, London, and New York. Millennium Management LLC, located in New York, opened an office in Dubai in 2020, and others followed after, including private-equity company CVC Capital Partners Ltd and ExodusPoint Capital Management, the largest-ever hedge-fund launch, with a $8 billion founding capital.
According to Henley & Partners, an advising business on leveraging investments to acquire citizenship, the UAE saw the world’s largest increase in high-net-worth individuals—those with more than $1 million—up 4,000 to more than 92,600 last year. An unknown customer in Dubai recently paid a record $15 million for a vanity license plate that only had two characters: P7.
To entice more people to move to the UAE, the government is looking into 401(k)-style pension plans, which are currently unavailable to expatriates, as well as ways to reduce the cost of healthcare insurance for people who want to retire in the country, according to Thani bin Ahmed Al Zeyoudi, minister of state for foreign trade.
Tens of thousands of Russians fleeing domestic strife have settled in Dubai, spawning pockets of Russian-language events and cultural venues in an otherwise English-speaking city.
“It’s common sense to come here,” Dmitry Klimovitsliy, 27, said as he sipped a drink and gazed out over Dubai’s Marina sector. He moved from St. Petersburg in September, just as Russian President Vladimir Putin began conscripting young men for the Ukrainian war. Klimovitsliy claims the move rescued his influencer marketing firm from failing because to Western sanctions.
The newcomers supplement the existing population. According to Russia’s embassy in 2019, 40,000 Russians and an additional 60,000 Russian speakers dwell in the UAE, which has a population of about 9 million people. According to Dubai’s airport management, Russian travellers transiting through the airport more than quadrupled last year to roughly 1.9 million, compared to 2021.
Officials in the UAE have stated that they are executing United Nations sanctions and that politically sensitive Russian persons have been denied entry into the country.
