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Once a symbol of security and luxury, Dubai faces an exodus of millionaires...
Life in Dubai was once considered one of the most comfortable forms of existence for wealthy foreigners, but also criminal figures.
Private schools were considered among the best, beaches were attractive, air connections were plentiful, and alcohol was legal for most foreign residents. There was no income tax, annoying financial controls, or social prejudices that prevented Chinese cryptocurrency millionaires, Russian oligarchs, Western bankers, Arab real estate investors, and Israeli entrepreneurs from living together.
For many years, the biggest concern for foreigners in the United Arab Emirates was the strength of their sunscreen. But that atmosphere has begun to change following the US-Israeli attacks on Iran and the ensuing tensions in the region.
Dubai's advantages are now being weighed against a new risk: the possibility of Iranian missiles or drones striking hotels, luxury residences or critical infrastructure in the Emirates. An incident on May 18 reportedly may have targeted the Emirates' only nuclear power plant.
Although most attacks have been neutralized before they cause serious damage, many financially able foreigners have chosen to temporarily leave rather than wait for further escalation. Some secured the last seats on flights to Europe and the US. Others drove to Oman, seeking alternative escape routes.
Initially, many of them thought they would return once tensions eased. But as the crisis continues, more and more are looking for a new, more stable and safer destination.
According to estimates, before the war, there were between 3 and 4 million wealthy foreigners and their families living in the Emirates, with over 240,000 of them millionaires. The majority were concentrated in Dubai, which is now experiencing the largest exodus.
Financial advisors and high-net-worth migration firms are reporting a sharp increase in interest in other countries. According to Henley & Partners, requests from Emirati residents for new alternatives have increased by more than 40% in recent weeks.
More than 35 countries have entered the race to attract the wealthy. Traditional destinations like New Zealand and Malta are being challenged by countries like the Maldives, which is launching new residency schemes for investors, or Argentina, which is expected to offer citizenship to large investors.
One of the destinations gaining the most traction is Milan. Tax lawyers and real estate agents in Italy report a significant increase in interest from Gulf residents.
For the very wealthy, Milan offers an attractive combination of luxury, financial networks and tax advantages. The city has become an important hub for American investment funds in recent years, while Italy's tax system for high-income foreigners is considered relatively favorable.
Parents can choose between American, British, French or German international schools, while the climate and European lifestyle remain another attractive factor.
For citizens outside the European Union, residency in Italy can be secured through investments in Italian companies, startups, or government bonds.
Another increasingly popular alternative, especially for Asians, is Singapore. In recent years, Dubai had attracted many Indian and Chinese investors thanks to its unlimited luxury and more flexible regulations. But now Singapore's more conservative image is being seen as an advantage.
The predictable legal system, efficient administration and developed financial infrastructure are attracting new capital. Major banks in Singapore are reporting increased inflows of wealth from the Emirates, while gold imports from the Emirates to Singapore have quadrupled since January.
However, neither Milan nor Singapore are considered perfect replacements for Dubai. In Europe, Russian oligarchs face restrictions and political pressure due to the war in Ukraine. Meanwhile, Singapore applies high income taxes and much stricter rules on capital controls and the source of wealth.
Experts estimate that part of the capital associated with cryptocurrencies and less transparent businesses will remain in the Middle East, precisely because of the flexibility offered by the Emirates.
Many international companies that allowed their wealthy employees to temporarily leave for cities like Milan or London are expected to bring them back to Dubai once the situation stabilizes.
Yet as the war continues, the sense of security that once made Dubai a magnet for the global financial elite appears to have been shaken. And the longer the uncertainty lasts, the more foreigners will start to build lives elsewhere. / Adapted from “ The Economist ”
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