More Than 300 Malaysians Listed As Dubai Property Owners Leak Shows

---

 


DUBAI UNLOCKED | With its glimmering skyscrapers, luxury accommodations and high-end shopping malls, the Gulf city of Dubai has attracted many of the world’s rich and famous.
“Investors” - both the legitimate and dubious - are drawn to the city’s property market too, thanks to its perceived lax regulations.
However, a trove of property ownership records leaked to a journalism consortium has offered a rare glimpse into Dubai’s property market.
From this, Malaysiakini learnt there are more than 300 Malaysians listed as owners of properties in Dubai who collectively own more than 500 properties in the city.
These include properties in the world’s tallest structure, the Burj Khalifa, alongside Bollywood star Shilpa Shetty and British A-listers David and Victoria Beckham.
At least six properties linked to Malaysians are also located on the iconic Palm Jumeirah artificial islands, where the Beckhams as well as actor Shah Rukh Khan own holiday homes.
Malaysiakini has independently verified some of the leaked data pertaining to notable Malaysian owners by corroborating it with official government records and other sources. For legal purposes, it is withholding the identities of some notable owners pending their comments.
Checks found most of the notable individuals were prominent business owners or corporate players, while no politician, or their known proxy, was found in the list.
Of the 500 properties linked to Malaysians, more than 300 are classified as residential properties by economists at the EU Tax Observatory and Norway’s Centre for Tax Research, who worked on the leaked data separately.
From there, the economists estimated that Malaysian-owned residential properties covered in the leaked data would be worth US$160.9 million (RM710 million) in 2022.
Their analysis omitted non-residential properties such as shops, offices and labour camps, due to data quality concerns for non-residential properties.
Further, when other properties not included in the leaked data are considered, the economists estimated that Malaysian-owned residential properties are worth a total of US$320 million (RM1.5 billion) city-wide.
They arrived at this estimate by complementing the leaked data with a variety of confidential and open sources.
Malaysiakini’s own checks on the same data (including non-residential properties), meanwhile, found records of roughly two-thirds of Malaysian property owners are associated with an Emirates ID, suggesting that they are residents in the United Arab Emirates in some capacity.
Overall, the economists found more than 218,000 Dubai residential properties in foreign hands in the leaked data, valued at US$160 billion (RM755 billion).
What is the data?
The property data at the heart of the project comes from a series of leaks of more than 100 datasets. Most of the data comes from the Dubai Land Department as well as publicly owned utility companies, largely for the years 2020 and 2022.
The data was obtained by the Center for Advanced Defense Studies (C4ADS), a non-profit organisation based in Washington, DC that researches international crime and conflict.
The data includes the listed owner of each property, as well as other identifying information such as date of birth, passport number and nationality. In some cases, the data captured renters instead of owners.
It was then shared with Norwegian financial outlet E24 and the Organized Crime and Corruption Reporting Project (OCCRP), which coordinated an investigative project with dozens of media outlets from around the world.
The Dubai Unlocked collaboration includes 74 media outlets in 58 countries, including Malaysiakini.
The global investigation has uncovered a wide range of shady individuals owning properties under their own name in Dubai, including Australian cocaine traffickers, relatives of African dictators and a coterie of sanctioned Hezbollah financiers - even though a basic risk assessment would have raised some red flags.
“Corrupt actors and politically exposed individuals avoiding public accountability use secrecy jurisdictions like the UAE to hide assets in plain sight,” said Maria Giuditta Borselli, a portfolio manager at C4ADS.
Denise Sprimont-Vasquez, a Portfolio Manager at C4ADS, added that “these kinds of investigations are key to understanding how we can increase transparency for governments enabling illicit activity”.
Officials in the UAE did not respond to reporters’ questions, but its embassies in the UK and Norway sent a statement saying that the country takes its role in protecting the integrity of the global financial system “extremely seriously”.
“In its continuing pursuit of global criminals, the UAE works closely with international partners to disrupt and deter all forms of illicit finance,” the statement added.
“The UAE is committed to continuing these efforts and actions more than ever today and over the longer term.”
Crypto millionaires buying brick-and-mortar
Dubai’s property market is particularly attractive to real estate speculators, money launderers and tax evaders in part due to its absence of taxes, particularly taxation on capital gains and rents.
One preferred method of buying property in Dubai involves using cryptocurrency - an acceptable practice there since 2017.
According to a Malaysian taxation lawyer, who chose to remain anonymous, many opt for the Middle East destination because Dubai residents can convert digital currency into fiat currency tax-free, allowing individuals to then invest in their desired real-world assets.
“Dubai has no personal income tax while in Malaysia, one can be taxed up to 30 percent on the gains from the digital currency exchange.
“Due to the absence of personal income tax in Dubai, individuals have begun declaring all their financial activities there, despite their expenses being tracked,” he said.
This loophole is an attractive channel for hiding laundered illicit funds, with minimal accountability.
While Dubai’s zero income tax deal is only available to residents, resident status can be easily obtained through setting up businesses there, via agents.
“One can obscure the illicit origins of their money by initially laundering it through cash-based businesses and services.
“The money is then converted into cryptocurrency through a Dubai-based exchange and finally exchanged for cash and fiat in Dubai.
“People prefer to use Dubai for exchanging cryptocurrency because Dubai has licences and regulations in place for such transactions, making it easier and potentially more profitable,” he explained.
In Malaysia, capital gains from cryptocurrency are not taxed, however, revenue gains from selling digital currency are.
This means that if someone trades cryptocurrencies regularly, they will be taxed on the profits. However, if cryptocurrency units are purchased as an investment, held onto for a while, and then sold, there is no tax on the profits made from this disposal.
Obscuring beneficial ownership
The first real estate transaction in Dubai using cryptocurrency was launched in September 2017.
The GBP 250 million (RM1.37 billion at the time) Aston Plaza & Residences development in Dubai Science Park sold fifty luxury apartments in five months (February 2018) with prices ranging from 30 to 50 Bitcoins for studios and one-bedroom apartments.
At that time, one Bitcoin was worth around US$4,600.
Aston Plaza & Residences’ website advertises that it accepts Bitcoin for payments.Following this success, Dubai has since become a popular destination for crypto investors scouting out developers accepting cryptocurrency payments for purchases of high-end villas, apartments and commercial properties.
According to property consultancy Knight Frank, Dubai saw a surge in luxury home sales, with 105 properties priced over US$10 million (RM47.2 million) sold in the first quarter of this year, marking a 19 percent increase from the same period last year.
Last year, Bloomberg attributed the influx to affluent investors seeking secondary residences, including crypto millionaires.
Another cause for concern for watchdog Transparency International is how easily beneficial ownership of properties can be obscured in Dubai, with the help of independent firms.
In one advertisement, agents said they can help set up businesses in Dubai for as little as 5,750 AED (RM7,401), with the cost dropping significantly in the numerous free zones like the Sharjah Free Zone where the package includes an office lease agreement for banking purposes.
“This company might even have another 10 companies behind it, further obscuring the identity of the beneficial owner,” TI’s Malaysian chapter secretary-general Raymon Ram said.
Money laundering
The influx may raise suspicion of shady dealings, but last February, the Financial Action Task Force (FATF) removed the UAE from its grey list.
This indicates a drop in the UAE - and Dubai’s - risk of illicit money flows, according to the task force formed by the Group of Seven (G7) developed countries to develop policies to combat money laundering.
But not everyone agrees.
The European Union designates the UAE as a high-risk country for money laundering and terrorist financing, and places it in the same category as over two dozen other states, including South Africa, North Korea and Afghanistan.
TI also deemed the FATF’s decision as “controversial”.
For instance, the anti-corruption watchdog, the FTAF said the UAE has increased the number of money laundering prosecutions but there is no independent data to corroborate this claim.
“With numerous politically exposed persons and people on the run from authorities still appearing to own property in the UAE unencumbered and uninvestigated, and complicit enablers helping ill-gotten gains slush in and out of the country, the UAE still has a lot more to prove,” it said.
- Mkini

---