Shifting Tides: Russians Favoring Oman Over UAE for Investments
Emirates are under imminent threat from the Sultanate.
In a noticeable shift, the Middle Eastern nation of Oman is seeing a surge in Russian investments, outpacing the United Arab Emirates (UAE). According to reports from "Vedomosti," this trend is in response to Abu Dhabi's tightened financial policies. Since February 2024, it has become difficult for Russian clients to work with local major banks, with accounts being blocked and additional checks on fund origins. This is primarily due to secondary U.S. sanctions against companies assisting Russians in circumventing restrictions.
Roman Makarov, a partner at NSP law firm, explains that unlike the UAE, Oman is less tied to the American banking system. Yet, Dubai remains the preferred choice for so-called business relocators. While UAE banks are applying increasingly strict compliance measures towards Russian clients, these challenges are primarily with transfers to and from Russia, and setting up a new company remains relatively straightforward.
Large Russian businesses, particularly those in the oil service sector and raw material transportation, feel comfortable in Oman due to its membership in OPEC and its own oil production. However, small and medium-sized businesses may find Oman and Muscat lagging behind the UAE in terms of living standards, investment opportunities, international schools, and financial infrastructure. Muscat, referred to as a "beautiful, low-key, peaceful, and expensive city" by locals, will never have the same level of foreign population as the UAE.
Despite Dubai's appeal, Russian investments in Omani real estate have also grown significantly. In early 2024, Russian-speaking clients showed a sharp interest in the local primary market, with twice as many deals concluded compared to the end of 2023. The volume of housing purchases increased by nearly 30% year-on-year. Apartments in Muscat's new buildings cost from $90,000, approximately 7.3 million rubles.
Investing in Omani assets presents significant risks, according to Yevgeny Ratskevich, general director of Metropolitan Capital Real Estate. Despite the development boom, the real estate, tourism, and other sectors are still far from maturity. Getting a residence permit in Oman is difficult, and the number of deals does not change this fact. Rental opportunities are also scarce.
Oman received the status of a guest country at the St. Petersburg International Economic Forum for the first time in 2024. In April, Russia became a partner of the sultanate in the field of transport and fisheries.
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Nikita Putyatkin
Factors to Consider:
- Strategic Location and Economic Ties: Oman's strategic position in the Middle East and its growing trade and investment relations with Russia make it an attractive option for investors.
- Diversification of Economic Partnerships: Oman's efforts to diversify its economic partnerships, including with countries like Russia, offer a more stable and less competitive environment compared to the UAE.
- Sector-Specific Opportunities: Oman presents opportunities in sectors like agriculture, tourism, and energy, which are areas of mutual interest for both Oman and Russia.
- Avoidance of Sanctions: Oman's opposition to unilateral sanctions could make it a more favorable destination for Russian investments, especially in sectors like energy where Russian companies might face restrictions in other regions.
- Growing Security Cooperation: Oman's participation in joint naval exercises with Russia and Iran might strengthen trust and create a favorable environment for investment.
- In light of the tightened financial policies in the UAE, many Russian investors are turning to Oman for its less entangled relationship with the American banking system, making it an attractive destination for real-estate investing.
- The surge in Russian investments in Oman's real estate industry, particularly among large oil service businesses, is linked to Oman's economic ties and strategic location in the Middle East, offering opportunities for diversification in sectors such as agriculture and energy.
