By Arash Hassan-Nia, Tehran (Source: Mianeh)
"We welcome all the dear Iranians for whom the UAE is a second home. We welcome you with open arms and offer you commercial, touristic, economic and social benefits..."
The above is a translation of a message in Arabic written on a billboard at the entrance to a recent three-day exhibition at Tehran's International Fares site. The event was first held more than five years ago to entice investors over to the Arab countries on the opposite side of the Persian Gulf.
The Arab sheikhs of the UAE are wise to the needs of Iranian investors. The promise of a three-year residency permit, plus easier travel to Europe and the United States is as appealing to Iranians and their families as the financial returns promised by construction companies and estate agents.
Construction workers in Dubai (photo by Paul Keller)
Five years ago, the promotional films on the huge monitors at the exhibition looked more like something from a Hollywood special effects department than real life, but all the various projects have since come into being, one by one, as the new Dubai is born.
In Iran, rumour has it that Dubai was built with Iranian money, and perhaps that is not so far from the truth. Certainly, Iranians have been involved in Dubai's property boom from the word go. The flow of investment money out of Iran has been on the rise and many Iranians have settled in Dubai.
According to a report by the Iran Commerce Council, Iranians run 10-30 per cent of all property companies in there. Another report, from the Iran Cultural Press, claims that 400,000 Iranians between them control 200 billion US dollars worth of assets in Dubai, a figure that could top 500 billion dollars over the next two years.
With the rise in property prices in Iran, it became possible to buy an apartment in a fabulous Dubai high-rise, paying far less than you would for something similar in Tehran.
But the advantages weren't only financial, as a young man who owns a construction company explained.
"The issue of residency is very important to me. Freedom and peace of mind are other important matters. Apart from that, the beautiful, luxurious flats here could be bought in installments with a mortgage. Conditions are not as attractive as before, but prices are still lower than on Argentina Square and Valiasr Street in central Tehran," he said.
A middle-aged man who owns a residential flat in Dubai agreed.
"High-rises in Dubai are cheaper than [those in Tehran]. Besides, there is a quality here that you would never find in buildings in Tehran," said the man.
The tension surrounding Iran's nuclear programme during the past three and a half years has made investing in Iran riskier, encouraging property agencies in Dubai to pour money into publicity. Pick up a remote control and flick through any Farsi satellite channel and you will quickly come across adverts aimed at Iranians, some with endorsements from celebrities such as the weightlifting champion Hossein Rezazadeh.
But some investors who rushed in have ended up the victim of fraud.
"All my friends have invested in Dubai, but of course they bought from more credible companies and they have not had any problems. One has to be very careful. Laws in Dubai are different from the laws in Iran and companies exploit our [ignorance]," said one man, who has not seen a written contract since making his investment two years ago.
"People who invested in property in the UAE, looking for profit have instead sustained losses. With the new economic downturn, some of the projects are not worth even half the price that was paid for them."
The man has since moved some of his money into Malaysia.
"Iranians have rushed into Dubai and it's no longer the calm, attractive place it used to be. Now in Dubai there's heavy traffic, inflation and other problems that we left Tehran and came here to avoid," he said.
Reports show that the value of the UAE economy has shrunk by more than 50 per cent compared with 2004. Falling oil prices have damaged its once flourishing property market. Prices have dropped from 200,000 to 50,000 dirhams per square meter in some parts of Dubai.
"Before this crisis, you could buy and sell property in Dubai in a matter of a few days, or even hours, and make a huge profit, but it is not like that anymore. I cannot sell my apartments. I cannot even cancel the construction contracts," said one man.
Even investors whose original motives for buying property were not purely financial are having problems. "I intended to obtain permanent residence in Dubai. Now, I can neither extend my visa nor pay the installments on my apartment," said one.
An investor who has managed to obtain residency has a different view.
"Before, I was reluctant to leave Iran, but with the new [economic] situation [there], I am glad that I am in Dubai. Conditions in Iran may become worse in the future," he said.
There is no sign that the number of adverts targeted at Iranian investors and tourists is waning. But Dubai is no longer the safe haven that it once was. Iranians will have to keep their options open in the search for a stable place for their money.
Arash Hassan-Nia is a journalist in Tehran
About Mianeh: Mianeh is a new independent web-based initiative run as a project by the Institute for War & Peace Reporting (iwpr.net) the award-winning non-profit media development organisation that works across the globe to platform local voices and promote international learning and engagement. Mianeh aims to be an open space for ideas, news and debate where writers in Iran can reach out to each other as well as to those outside the country who are interested in learning more about the vibrant and dynamic society that is Iran today.
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