"This is not a country — this is a giant company." What Russian businesses look for and find in Dubai

Last year, the activity of Russian business in the United Arab Emirates increased several times. Under sanctions, Dubai has literally become a window not only to the east, but also to the west for companies working with the international market. The participants of the Fontanka round table spoke about how to properly start and develop your business there and what opportunities there are for investment.

"This is not a country — this is a giant company." What Russian businesses look for and find in Dubai

Why Dubai?

The activity of Russians in the Emirates this year was unprecedentedly high.

— Our people are actively buying real estate — to invest money, withdraw some assets, find an opportunity to invest abroad, as well as move and relocate a business, — says Tatyana Ageeva, founder of the real estate agency Ageeva Real Estate, which sells and rents real estate in Dubai.

She explains the reason for such interest in the Middle Eastern country by the lack of tax burdens and various business inspections.

— Until now, businesses here only paid 5% VAT, and from June 2023, a profit tax will be introduced if it exceeds 100 thousand US dollars (365 thousand dirhams), — Tatiana Ageeva said. — But if you only have an office based in the Emirates, and you do not carry out any transactions within the country, then you will not have to pay any taxes as before.

Businessmen who open a company in Dubai do not always leave Russia forever. Often only the international part of the business is transferred here — in the last year this has helped save international contacts and sales.

— In the Emirates, everything is simpler than in Russia from the point of view of accounting and taxation, but there are some specifics, and not everyone can quickly navigate, — says Christina Tantsyura, managing partner of SKY Consulting Group. — It is not always easy to find administrative staff who are competent in simple questions: how to get a copy of the constituent documents, what to do with reports and how to submit them, what a deposit is and how to turn on the electricity in the office. It’s common for us to rent an office — and there is light, there is water, but here everything needs to be connected first. And since mid-2022, this particular block of services has become as in demand as assistance in business relocation.

Dubai, she confirms, attracts with comfortable tax conditions: 5% VAT and only on transactions that you conduct within the country. There are absolutely no personnel costs, except for the obligation to obtain a work visa.

Christina Tantsyura calls general political and economic stability the second factor:

— The Emirates have been moving along the declared path for 20 years and are not turning anywhere from it. They want to become the best innovation and trade hub, and they are moving towards it, giving foreign companies more and more opportunities, increasingly liberalizing legislation.

Another important aspect — comfortable living conditions in terms of climate (hot 4 months a year, the rest of the time - normal), personal safety, tolerance and friendliness. And, of course, Dubai for Russians — this is an opportunity to work with the whole world, since partners from Europe and the USA, as a rule, are ready to continue to cooperate with them, despite the fact that they are from Russia.

— By opening a business in Dubai, you are entering one of the most dynamically developing markets in the world, — added Varvara Vislenko, chief physician and owner of the Belaya Medveditsa dental clinics. in St. Petersburg, medical director and creator of the Polar Bear General Dental Clinic in Dubai. — I think many people know the fact that the tax rate in the UAE is 0%. From the beginning of the financial year (June 1, 2023), income tax will begin to apply in the Emirates: the rate will be 9% and will depend on the company’s profit — from 102 thousand US dollars per year. But startups and small businesses are exempt from paying taxes. Public Benefit Entity — companies that provide social benefit — are also exempt from taxes, and the healthcare sector falls into this category.

— United Arab Emirates — this is not a country, — says the head of foreign projects at Becar Asset Management, Alexander Pestryakov, — This is a giant company that is developing as a state corporation. It could be compared to Tesla, and its leadership, like Elon Musk, creates worldwide hype — marketers would call this a sales funnel. For example, there are no such installment plans as in Dubai anywhere — and not only at the construction stage, but also after it, even for 10 years. This creates a lot of excitement for those who want to speculate on growth and play on investment leverage.

Becar itself entered the UAE market in 2016 with a coliving project — apart-hotel with residential part and office space. Plus, events are held here, you can “grow” contacts. According to Alexander Pestryakov, co-living is designed for young guys who are creating new formats, “funky” business, which is relevant for a country where 70% of the population — from 24 to 33 years old.

Sell, produce, teach and treat

Historically, Russians look to Dubai as a place to develop an IT business. Plus, since the 90s, there has been an active purchase and resale of equipment, which is inexpensive there due to the lack of excise taxes. But this does not mean that there is no place for entrepreneurs from other fields in the country.

— In the spring of 2022, the UAE government openly named the areas that they are interested in and in which they are actively attracting specialists: IT, high technology, education and medicine, — Varvara Vislenko notes.

— With the right strategy and implementation tactics, absolutely any business can be successful in the UAE, — Kristina Tansyura comments. — Unless, of course, you paid attention to market analysis, found your niche and developed tactics, and do not plan to work “like in Russia.” Special attention — marketing, because people here love with their eyes and look exclusively on social networks. 99% of the Emirati population uses social networks and spends at least three hours a day on them. Therefore, we need to change our minds: sell pies not from a tray, but via the Internet, and with delivery.

Foreign policy changes are also adjusting the business landscape. For example, during the pandemic, meat supplies to the UAE from New Zealand and Australia stopped, which Miratorg took advantage of, which until now the lobby of these countries had not allowed into the market.

Due to active migration, there is a great demand for Russian-language services: kindergartens, nannies, doctors.

— Even discussing business is easier than explaining what kind of cough you have, — Kristina Tansyura comments. — Nowadays, many companies hire Russian-speaking staff: previously, “knowledge of the Russian language” was a requirement. was found in one out of a hundred advertisements, now every second: fluent Russian will be the preference. This is convenient: you can come to the country, apply for an independent freelance visa and find a job.

In addition, according to her, many local companies have finally realized that in Russia there are many professionals in the field of marketing, network management, and complex logistics who have faced such difficulties that they are no longer afraid of anything.

The expansion of the Russian community gives rise to new requests — and new opportunities. For example, Tatyana Ageeva says that she misses delicious food in Dubai: “There are a lot of establishments and shops designed for citizens from India and Pakistan, so the food everywhere is very spicy, and at the same time, there are always a lot of visitors in Russian restaurants.” including local residents.” Therefore, according to her, the emergence of the network “a la Vkusville” would be greeted here with a bang.

Business in the real estate sector is also actively developing. Last year, according to Alexander Pestryakov, about 2.5 thousand licenses were issued to real estate agencies — this is 50% more than a year earlier. About 160 development companies have opened, — and it can be registered if a plot of land for construction has already been purchased. 1,300 companies are engaged in leasing. Of course, entrepreneurs from all over the world come here, but there are also plenty of Russians.

Concrete investments

One of the attractive areas for investment is real estate. Moreover, as Tatyana Ageeva says, Russians are traditionally focused on purchasing housing, while now, perhaps, commercial real estate is of even greater interest.

— In Russia, it is customary to buy a commercial property as a ready-made rental business, so clients ask if there is already a tenant there, — she comments. — Here, as a rule, premises are sold without tenants, but the demand is so high that clients who move here with business — beauty salons, clinics, shops, — during the day with fire they cannot find premises of 100–150 square meters. Buying them is also not easy, since developers often leave them under their own control.

The advantages of street retail are that the premises can be rented for a longer period than a regular apartment, and the tenant is a legal entity, interest-free installments are available, plus you can get a resident visa with an investment of 205 thousand US dollars. Lately there has also been a demand for warehouses — people want to develop a business related to storage or production. Well, it is always popular to buy housing for further rental with a yield of up to 12% per annum.

— This is a city of expats, so rentals will always be in demand, — explains Tatyana Ageeva. — People come to try their hand, but without a resident visa they cannot rent an apartment for a year and are forced to rent monthly. Our investors have traditionally targeted one-room apartments and studios, but today housing with three and four bedrooms — a very popular segment, because families move here, and it is not customary to save square meters here.

Kristina Tantsyura added that the demand for two- and three-room apartments is growing because, according to visa rules, it is impossible for a family to obtain a resident visa while living in a studio, even if they agree to live there. “If children are of different sexes— they must have different bedrooms, and this will be asked when accepting documents for a visa,” — she added. In particular, this is why low-paid staff, as a rule, live in the Emirates without a family, because... unable to meet housing requirements.

Investments in real estate in the Emirates, unlike Russia, are more transparent: here the local land department records information on all transactions, buildings, footage, real price — and all this can be accessed through multiple platforms. At the same time — in contrast — Real estate agents often behave like in Russia in the 90s, notes Alexander Pestryakov, so it’s important to look at who you’re dealing with.

If we talk about making a profit from real estate, now, according to Alexander Pestryakov, the average profitability on long-term contracts is 3–5.8%.

— There are examples when people bought an apartment on Palma and rented it out with one check for a year, receiving 8% profit, but this, one might say, was lucky, — Alexander Pestryakov comments. — For short-term rentals it can be 8-10% per annum, but a more realistic figure is 7%. In our projects, we guarantee a return of 7% for three years, and we fix the cost in dollars, converted to dirhams.

He noted that most management companies transfer income to apartment owners monthly, about 30% — quarterly, 10% — once every six months.

Where to start

Of course, those who are planning to open a business in the UAE will have to study the rules and procedures of working in this country themselves. At the round table, experts gave only a brief overview of what they will have to face.

Firstly, in the Emirates any type of activity requires licensing, and it is the license — This is the main document of the company. There are 4 classes: trade (everything related to trade in physically existing goods), production, incl. development; services (consulting, medicine, dental treatment, etc.) and HoReCa (everything related to the tourism and restaurant business).

— It is impossible to include all 4 types of activities in one license, — explains Christina Tantsyura. — Moreover, there are groups in each class, and if you want to work on furniture, you can add carpets, lamps — that is, interior items. But you cannot also include trade in petrochemicals or cows. To do this you will have to open a separate company. If you are a doctor, — You can’t be a consultant, and a teacher can’t become a financial coach. This causes misunderstanding among Russians and even Europeans. Therefore, it is important to correctly decide on the business so as not to incur additional registration costs when six months later it turns out that you actually need a different license.

The second difficulty is related to opening bank accounts for Russians.

— In all the Emirates there is only one area that is not very loyal to Russians, — these are banks, but here, of course, foreign sanctions play a role, — added Christina Tantsyura. — Unfortunately, they have recently tightened the rules for opening accounts, but it's not that bad. A personal account, if a person has a resident visa, that is, he is a homeowner, has a job or his own company, and is not on the sanctions list, there is no problem opening it.

For companies, according to her, the requirements are increased — but they apply to all newbies. For Russians, the main difficulty is providing statements from their accounts from Russia, because the bank should not be under sanctions, and we have few of them.

The rest, says Christina Tantsyura, everything is simple and clear: in a free zone (not to be confused with offshore companies), companies whose business is connected with international markets can be registered online — through a special portal and recording a verification video. In the mainland this is not possible, but, in any case, all owners and directors of the company need to come to the Emirates to obtain resident visas, and after that they can open a bank account.

Tatyana Ageeva noted that there are a number of small banks where it is easier for a new company to open an account, and although they may not have such favorable terms of service, by becoming their client you can earn a reputation, — after which larger local banks will open an account.

— When opening a business in Dubai, you look towards the bank and adjust so that everything goes well, — summarized Alexander Pestryakov.

— Due to global events and the large influx of expats in the UAE, opening a business — as a separate process — may take a while, — noted Varvara Vislenko. — But as soon as a bank account is opened, you can take off. If the Emirates need you, everything will be opened to you and you will be allowed to work. You must keep in mind that it is they who choose you, not you who choose them. Be patient, it will come in handy in the first steps.

As a rule, there are no problems with interaction with the authorities.

— In the Emirates and the public sector — this is also a corporation, moreover, government agencies are self-sufficient, — and how much services they sell, that’s how much they earn, — says Christina Tantsyura. — Therefore, they are interested in providing you with quality service, because every year they are awarded stars for this. Three stars — reason to fire the minister.

— As a rule, in government agencies everything is done very quickly — You can register the same apartment, connect electricity, water in one day, and you don’t have to contact different organizations, this is handled by an institution reminiscent of our MFCs, — Tatyana Ageeva agrees, — Everyone is smiling, ready to cooperate, showing interest — We are not used to this and are looking for a catch.

At the same time, as Varvara Vislenko notes, the rules of the game are constantly changing, laws are adapted to the changing environment literally every 2-3 months:

— In my practice, during the six months of living in Dubai, I managed to see the restructuring of the banking system, the procedure and timing for obtaining residency, the procedure for obtaining a driver’s license — and at the moment there is a kind of reform in the legalization of documents of healthcare professionals.

According to her, the flow of life and the course of events, at first glance, seems slow compared to what we are used to in Russia.

— However, looking back, one day you realize that everything that was needed has been done, and what is happening around is changing right now, — she added. — Where there is desert today, in six months a five-lane highway and a microdistrict with premium villas could be built. And this is not a pretty picture, this is reality. This is what makes Dubai so attractive — those who want and are used to working realize their efficiency by 300%.

It's a delicate matter

But when working in the Emirates, you must know the peculiarities of the local mentality. For example, Alexander Pestryakov says that you cannot send a director, vice-president, etc. to negotiations with local partners: if you want to open your own business here, then the owner must come in person, impress the future partner, tell about himself with fire in eyes.

— Finding a common language is not difficult if you build communication on similar universal values, — Varvara Vislenko believes. — It is not customary here to be impolite, rude, or ultimatum-like. Nobody needs you here in the Emirates, especially often in the “challenging” manner that Russian businessmen are used to communicating, unfortunately. Show respect and deference to the owners of the country — They will hear you and will definitely support you.

— The Emirates do not give a second chance: if you deceived a local partner, in two days all the key people in the country will know about it, — added Christina Tantsyura. — Here you need to clearly monitor what you are doing and how you are positioning in the market. And if you sue local residents, you will most likely lose, because general courts are subject to Sharia law, and not 100% commercial law.

Expensive-rich

Of the features of local life, everyone notes the high cost. And, first of all, this can be seen in the example of apartment rentals — the main expense item for expats. Tatyana Ageeva says that in the spring, renting a studio in the JVC area cost about 4 thousand dirhams (80 thousand rubles), and now — already about 7. Renting a one-bedroom apartment in Dubai Hills has risen in price from 8 thousand dirhams in the summer to 14 thousand by now.

Varvara Vislenko shares her personal experience of living in Dubai: renting a two-room apartment in a residential building with a parking lot and a swimming pool in an area without a metro or any transport will cost 7-8 thousand dirhams; rent a car for a month depending on the class — from 1,200 dirhams; renting a three-bedroom villa in a good gated community with security, a swimming pool and a children's playground — from 25 thousand dirhams per month.

— Utilities in general are much more expensive than in Russia, — you just have to accept this fact, — she added. — For apartments it is from 1,000 dirhams plus mobile communications from 300 dirhams per month. And in the summer (from May to November) utility bills double due to the constant use of air conditioners.

— A person coming here must have a financial cushion. for 3–4 months, — says Tatyana Ageeva. — It takes time to get a job, receive your first salary or income from business. When a person becomes a resident, he can no longer travel with a Russian international license, which means costs and time to obtain. Because you still have to go to school to learn the local rules, which differ from Russian ones. Again, you cannot buy a car until you have a resident visa.

At the same time, reminds Alexander Pestryakov, immediately upon arrival you cannot rent an apartment for a long period, for example, for a year, — For this you need a resident visa.

— During this period, people usually rent serviced apartments, and it is into this niche that we entered with our project, — he continued. — Our average rental period is 1–3 months, the target audience is — young professionals, companies that are relocating. While an employee is preparing documents in Dubai, he needs to “acclimatize,” and it is in co-living that people communicate every day and help solve problems that newcomers have.

To ensure fewer problems arise, Christina Tantsyura recommends studying the laws of the country where you are going to move. Moreover, the Emirates — a country with two official languages: Arabic and English, and all laws have been officially translated into English, and over the past year they have also been thoroughly analyzed in Russian.

When moving with your family, you need to take into account that all education is paid, and there are not many Russian-language schools. Therefore, it is worth choosing an area to live near the school, so as not to have to transport your children far. “Choose according to your comfort, and not according to the prestige of your area of residence. Moreover, in any area there is housing of different classes — from standard to luxury", — she clarified. Separate line — medicine.

— Even good health insurance does not cover a large number of things, but you should never skimp on insurance, — Christina Tantsyura insists. — Some people buy the one they need to apply for a visa, but this savings later comes at a cost. For example, a regular appointment with a good pediatrician without tests costs $250.

In the growth phase

Interest in the UAE market is unlikely to decline in the near future, and this could become a business development strategy, experts believe. For example, there is now an active growth in real estate prices, comparable to what was observed in Russia after the launch of preferential mortgages during the pandemic. There is demand — it exceeds supply, these are the laws of the market.

— If you have been thinking about investing in Dubai for a long time, you should do it now, — says Tatyana Ageeva. — After the pandemic, we see a new growth cycle in Dubai. So if you want to buy and then sell, then you have another 2-3 years for such investments. Of course, it is impossible to predict large-scale upheavals on a global scale, — for example, a new pandemic. But even in this case, the Emirates market provides an opportunity to rent out real estate and receive passive income.

According to her, unlike many countries that show an unfriendly attitude towards Russia, the Emirates still remains a good option for diversifying both country and financial risks — taking into account the sustainability of the local economy.

— Main advice — go to Dubai, walk around there, take a closer look, — recommends Alexander Pestryakov. — He is very sociable, you will quickly find both orders and partners. Even without an idea, actively join channels, groups and different communities. Having secured contacts and studied the market, return home and look at the legal part, contact consultants, and start launching a business.

According to him, there is no need to rush: it is better to prepare the basis for business here in order to make a profit there. Despite the fact that there are no taxes in Dubai, it is very expensive, and earnings are only possible if there is turnover. If it is not there, then every month there is “downtime” won't be cheap. It also makes sense to find a partner whose license you can legally use at first.

— If you want to have a successful business that works and brings benefits, my opinion — only personal presence and constant monitoring of all stages are necessary to achieve the goal in the fastest way, — Varvara Vislenko believes. — You may not move, but then you will have to spend a lot of time and resources on the road to keep your finger on the pulse. No one but you cares about your business. No one but you knows its mission, values or understands how it should work. Relocate a business to a new environment and adapt it there without adapting its author — my opinion — obviously a failed idea.

— You need to see partnership in everything, not competition — This is the key to success in the Middle East market. Cooperate, communicate and be positive, — says Kristina Tantsyura and shares her rules of working in the UAE:

  • Take into account the culture and national characteristics of the Middle East.
  • Adhere to business ethics and understand that there will be no second chance in case of incorrect behavior.
  • All decisions are made by the Arab population; communication with the Emirates is indispensable.
  • The UAE follows priorities: children, culture and sports. These are important points in marketing that help grow your business and increase brand awareness.
  • Produce it yourself, rather than buy something ready-made.
  • Emirates live with long-term plans — they have no outstanding strategies. Take your time and don’t rush your partners; the East does not tolerate haste.
1/17/24
Maria Mokeicheva
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