Pakistanis Are Third Largest Foreign Investors in Dubai Real Estate
By Riaz Haq
CA
Pakistanis have invested $10.6 billion in Dubai real estate and rank as the third largest investors in the city on the Gulf. Indian investors lead Dubai real estate investments with $29.8 billion, followed by British investors' $14.7 billion investment.
Wealth from top 20 countries invested in Dubai real estate - Source: EU Tax Observatory
With at least $146 billion in foreign wealth invested, the Dubai property market is now the world's largest offshore investment market for foreign investors. It is twice as large as the London real estate market in terms of wealth invested by foreigners through shell companies. There are nearly 20,000 unique foreign owners of Dubai real estate from Pakistan, the third largest number behind almost 35,000 Indian owners and about 23,000 owners from the United Kingdom, according to the EU Tax Observatory .
The record flow of foreign wealth into Dubai real estate has drawn the attention of the FATF (the Financial Action Task Force), the global anti-money-laundering watchdog. The UAE is now "under increased monitoring” (often referred to as the grey list) by the FATF. It is widely accepted that real estate is used for money laundering and hiding wealth from tax authorities.
Money laundering risk - Source: FATF
Many rich Pakistanis, including top politicians and their family members, own real estate in Dubai, according to press reports . top politicians from Pakistani political parties like PPP, PML-N, ANP and MQM own Dubai real estate. A 2020 Transparency International report said the following:
"The UAE’s booming construction and real estate sector emerges as another major weakness. It accounts for a fifth of the Emirates’ GDP but remains incredibly vulnerable to money laundering. Complex ownership structures can be used to obscure the identity of those buying property, as well as where their money is coming from.
"Despite the UAE’s role as a major international hub for finance and trade, the report concludes that authorities there are not cooperating with international partners. This could make the Emirates an attractive location in which ‘criminals could operate, maintain their illegal proceeds, or use it as a safe haven.’
"The FATF report confirms what investigative journalists, anti-corruption activists and whistleblowers have been saying for years: the UAE is a key piece in the global money-laundering puzzle. Its susceptibility to money laundering has seen it appear time and again in major cross-border corruption scandals".
(Riaz Haq is a Silicon Valley-based Pakistani-American analyst and writer. He blogs at www.riazhaq.com )
