Courtesy of Wall Street Journal, a look at how oil-rich Gulf countries have become a magnet for global wealth, and they’re trying new strategies to keep the good times rolling:

Sports stars, tech billionaires and influencers arrive on more than 30 charter flights a day at this Persian Gulf emirate’s main private-jet terminal, where traffic has tripled in the past three years. Fliers are served macarons and cappuccinos with their faces printed on the froth.

They arrive to a city where property deals have soared, the Michelin Guide just started rating restaurants and Beyoncé performed at the lavish opening of Atlantis the Royal, a hotel that calls itself the world’s “most ultraluxury” resort, with rates up to $37,000 a night.

Some 500 miles away in Riyadh, soccer star Cristiano Ronaldo—who joined a Saudi club in December for a reported $200 million a year—is living in the penthouse suite of the iconic Kingdom Tower with his girlfriend and their children, who are learning Arabic. He has been spotted cruising around town in a Bentley.

Once considered a desert hardship posting that drew talent mainly from the surrounding region, the oil-rich Gulf is becoming a magnet for global wealth, attracting European bankers, American hedge-fund managers and Israeli tech founders to countries with zero income taxes and a swelling food, sports and arts scene.

The boom is mostly centered on the United Arab Emirates and Saudi Arabia, but Qatar is also getting in on the action. Still glowing after a FIFA World Cup that exposed many foreigners to the Middle East for the first time, Qatar receives a constant flow of delegations from Europe and Asia confirming its status as the go-to market for countries seeking new supplies of natural gas.

Gulf economies and their state budgets have gotten a boost from the Ukraine war, which brought high crude prices and redirected global flows of people, commodities and capital. Incoming Russian citizens and money have turbocharged Dubai’s real-estate market, and the city has become a key waypoint for getting Western goods into Russia.

The U.A.E. and Saudi Arabia are looking for ways to keep the boom going even after oil prices come down. They are liberalizing their economies with looser immigration policies and laws less beholden to Islamic strictures, attracting more tourists and foreign workers from around the world—although significant restrictions remain.

Saudi Arabia, the region’s biggest economy, recorded the fastest GDP growth in the world last year among major economies, according to the International Monetary Fund, and 2023 is expected to be another lucrative year for the world’s biggest oil exporter. The U.A.E. was just behind it at 7.6% and Qatar grew at 4.8%, its fastest rate in nearly a decade.

The boom is rebalancing geopolitics in the Middle East. Gulf monarchies have become Washington’s most influential partners in a region where the U.S. is trying to reduce its entanglement in costly wars and messy politics after decades of failed interventions. Yet Gulf leaders are willing to pursue foreign policies and economic interests at odds with the U.S., including oil policies that favor higher prices and undercut Western efforts to isolate Russia after its invasion of Ukraine.

With money, talent and arts funds flowing to and from the Arabian Peninsula, Saudi Crown Prince Mohammed bin Salman and U.A.E. President Sheikh Mohamed bin Zayed Al Nahyan are turning the Gulf into an independent power center. Their efforts to make peace with rival Iran, wind down the war in Yemen and end Syria’s isolation after a decade of civil war are raising hope for a longer period of prosperity, though not in ways that necessarily match U.S. interests. Traditional Arab capitals like Cairo, Damascus and Baghdad, meanwhile, are plagued by more than a decade of conflict, economic crisis and government mismanagement.

“That all amounts to one thing: the new Gulf,” said Abdulkhaleq Abdulla, a prominent Emirati political scientist at Emirates University. “Confidence is the name of the game here.”

In Dubai, rents are up more than 25% in the past year, and the volume of property deals is at an all-time high, according to CBRE Group, an American commercial real-estate services and investment firm. Beachside villas and skyscrapers have seen an influx of Russian investment thanks to commercial flights to Moscow and narrow enforcement of Western sanctions.

Free expression in the region remains severely curtailed, and governments lack transparency. Autocratic rule has created a climate of fear that often discourages local advisers or highly paid foreign consultants from offering honest advice. Dozens of ordinary Saudis have been jailed and sentenced in some cases to decades in prison over online criticism of the crown prince’s policies, while more than 50 Emiratis who were jailed over criticism of the government remain incarcerated after they served their sentences, according to Human Rights Watch. Homosexuality is criminalized across the Gulf, and restrictions on women’s dress in Saudi Arabia have loosened but remain conservative by Western standards.

The boom has created some momentum for social liberalization. The U.A.E., where 90% of the population is foreign, has cut taxes on alcohol, permitted unmarried couples to live together and issued new visas encouraging people to stay for longer. The country has decriminalized carrying products with marijuana into the country and indicated its next moves would be allowing casinos.

Saudi Arabia is expected to soon break a ban on alcohol. It has already allowed women to drive and unrelated men and women to mix in public. It is also pursuing a $1 trillion bid to attract tourists—long limited to Muslim pilgrims—and creating an airline to compete with the region’s successful carriers, Dubai’s Emirates and Qatar Airways.

New boom
The Gulf has had oil booms before, when crude prices rose above $100 per barrel. Monarchs invested billions of dollars in white-elephant projects that were never completed or handed out cash to citizens to rally support.

This boom is different, officials and economists said. It’s the first since the 2015 Paris agreement accelerated the West’s transition toward renewable energy, a shift that startled Gulf petrostates and convinced them that they need to invest fossil-fuel profits now to diversify their economies.

Oil prices rose above $120 a barrel last year, but they’ve since come down, trading at roughly $76.

Instead of just parking their oil wealth in Western bond and equity markets, Gulf states are taking more risks. Their sovereign-wealth funds are investing tens of billions of dollars domestically and overseas. Five of the top 10 state-owned investors last year—made up of sovereign-wealth vehicles and pension funds—were from the Gulf, according to Global SWF, a research firm.

For alternative cash faucets, Saudi Arabia kept an elevated sales tax it had raised during the pandemic, and the U.A.E. is introducing a corporate tax later this year.

“This boom is not happening in a $100-oil environment,” said Tarek Fadlallah, chief executive of Nomura Asset Management in the Middle East. “It’s happening despite the lack of a $100-oil environment.”

Economists say a global economic slowdown will still hurt, sapping demand for countries still dependent on energy markets. Other risks include lavish spending that rivals previous booms. Plans in Saudi Arabia alone include a 1,700-foot-tall, 75-mile-long skyscraper; an airport that aims to become one of the world’s busiest international hubs; and a new downtown in Riyadh, centered on a 1,300-foot-tall cube.

A lack of income taxes has helped Dubai attract tech workers and hedge-fund staff from San Francisco, London and New York. Millennium Management LLC, based in New York, set up an office in Dubai in 2020 and others followed, including private-equity firm CVC Capital Partners Ltd and ExodusPoint Capital Management, the largest-ever hedge-fund startup with $8 billion in initial capital. Highly paid commodities traders are also making the leap from London.

“Tech people, all of them moved to Dubai. Crypto, moved to Dubai. Fashion, moved to Dubai,” said Adel Mardini, the chief executive of Jetex, a global private-aviation company based in the city. “Celebrity, Instagrammable, all of them.”

The U.A.E. had the world’s biggest jump in high-net-worth individuals last year—those with more than $1 million—up 4,000 to more than 92,600, according to Henley & Partners, an advisory firm on using investments to secure citizenship. An anonymous buyer in Dubai just paid a record $15 million for a vanity license plate with just two characters: P7.

To further entice people to the U.A.E., the government is looking at 401(k)-style pension plans, currently not available for expatriates, and ways to lower the costs of healthcare insurance for people who want to retire in the country, said Thani bin Ahmed Al Zeyoudi, minister of state for foreign trade.

Tens of thousands of Russians fleeing turmoil at home now call Dubai home, creating pockets of Russian-language events and cultural spaces in a traditionally English-speaking city.

“It’s common sense to come here,” said Dmitry Klimovitsliy, 27, as he sipped a beer overlooking Dubai’s Marina district. He relocated from St. Petersburg last September around the time Russian President Vladimir Putin began conscripting young men for the war in Ukraine. Klimovitsliy said the move saved his influencer-marketing startup from collapsing under the strain of Western sanctions.

The new arrivals add to an existing population. Russia’s embassy in 2019 said 40,000 Russians and an additional 60,000 Russian speakers lived in the U.A.E., which has a total population of roughly 9 million. Russian passengers traveling through the airport doubled last year to about 1.9 million, compared with 2021, Dubai’s airport management said.

U.A.E. officials have said that they are enforcing United Nations sanctions and that politically sensitive Russian individuals haven’t been allowed to move money into the country.

Belarusian music and events promoter Evgeniy Morozov organized a gala dinner on Jan. 6, the eve of Russian Orthodox Christmas, at the ballroom of the sail-shaped Burj Al Arab hotel with Welsh singer Tom Jones, who he said is popular among Russian speakers. The top ticket price: $4,000.