More than 400,000 Iranians are estimated to have moved Dh730 billion ($200 billion) of capital into Dubai recently, mostly invested in the UAE's burgeoning real estate sector, according to Iranian sources.
Kiran Prasad/Gulf News
Iranians have purchased a large number of residential and commercial plots in Dubai.
"Iran has been wishing for some time to transform its free zones into the business hub of the region, but then Dubai appeared on the scene and it was 'checkmate Iran'. Today, the country is sucking in Iranian capital both in real state and in business activities," a report released by Iran's Culture Heritage News (CHN) agency said yesterday.
The estimate appears to have been somewhat inflated based on the fact that Emaar Properties the largest developers in terms of deliveries have handed over 10,000 units so far. With an average face value of Dh1 million, this translates to only Dh10 billion worth of properties.
A similar number of deliveries is expected within the next 12 months, as the Palm Jumeirah villas will be up for handover in the second half of 2006.
Part cause of the increased funding flowing into the UAE may also be as a result of the changing political situation within Iran. Iranians have recently voted a conservative leader to power, ending two eight-year reigns by reformist leaders, Ali Akber Hashemi Rafsanjani and Mohammad Khatami.
It is unclear if the fear of a blacklash by conservatives has resulted in the latest round of capital outflow, or even the stand-off with the West on resumption of Iran's nuclear programme is the cause of wealthy Iranians looking to hedge their funds in a more secure location.
"Iranian capital is buying into different sectors in Dubai. Some 20 per cent of investment in Dubai's shopping centres is now registered under Iranian names, and during just one week at the end of June, Iranians bought 31 per cent of the luxurious villas of Al Hamra, a tourist and residential complex, located in Ras Al Khaimah," the CHN report said.
"With the rapid investment growth, Dubai officials foresee the rate of Iranian investment in the country to increase by 50 per cent by the end of 2006, reaching a sum of Dh1.1 trillion ($300 billion)."
Historically, Iranians are one of the largest investors in Dubai. The Islamic Revolution in 1979 forced many liberal and wealthy Iranians to move their capital out of the country. Dubai was one of the principal beneficiaries.
Iranians have purchased a large number of residential and commercial plots in Dubai Marina, Jumeirah Lake Towers and other areas designated for "freehold" property development.
Statistics from Dubai Chamber of Commerce and Industry show that more than 6,500 companies are now registered in the emirate under Iranian nationality.