Dubai – where East meets West

Date: 20 Nov 2024

Karen Jones

Dubai has moved from regional hub to global financial centre, attracting ultra-high net worth families, private banks and family offices from across the world. A combination of regulatory reform, new tax rules and long-term residency visas is reshaping how wealth is structured and where it is booked, positioning the Emirate as a key junction between East and West in the next phase of global capital flows. As elections and regulation spearhead a scramble for UHNW to relocate around the world, Citywealth investigates the rise of Dubai as an IFC and discovers a new tax triggering more interest in planning.

Prime Minister of the United Arab Emirates: Mohammed Bin Rashid Al Maktoum

First highlighted during Covid as a warm place to sit out the pandemic and then compounded with the Russia Ukraine situation as Russians flocked to the region, Dubai has stepped up to create a phenomenal financial centre that has become as Atiq Anjarwalla, Senior Partner at Anjarwalla Collins & Haidermota (AC&H Legal Consultants) says a “beacon for wealth planning” but others also confirm a substantial family office hub. As professionals and private banks open in Dubai, we speak to local experts to get their view.

The move from West to East

Tim Casben, Managing Partner, UAE, Corporate finance and tax, Gowling WLG introduces us to the wonder that has become Dubai, “Dubai and the wider UAE is taking full advantage of the shift in global growth from West to East and it has genuinely become the place where East meets West.  The UAE made some fundamental regulatory changes which has significantly assisted in the growth, changing the working week from Sunday to Thursday to Monday to Friday, the introduction of a golden visa and removing the requirement for a local partner in onshore businesses.  In the last three years it has become clear that Dubai and the wider UAE is genuinely competing as a global centre with Singapore and Hong Kong with ultra-high net worth individuals from across the globe choosing to base themselves in the UAE over the more traditional financial centres.  Meanwhile the UAE has been quietly accumulating significant wealth with it recently being reported as having $1.7 trillion of sovereign wealth, this is having the knock-on effect of attracting global wealth managers to the region.” 

Leonie Kerswill, Managing Director at Sanctuary a family office and fiduciary expert and an ex-PwC London tax partner, confirms the excitement in Dubai, “The UAE is buzzing. We are seeing new family offices being set up alongside new businesses as entrepreneurs and their families are relocating from the UK and other jurisdictions. Key attractions are not only the attractive tax environment but also features such as personal safety for the family and quality of life. The UAE has responded by introducing ten-year golden visas and foundation legislation that has proved hugely popular for clients looking for structures designed to protect assets and provide a platform for succession planning. For Golden Visas there are various routes including being linked to property purchases, investments and particular areas of expertise.”

Andrew Horbury FICA, Founder and Managing Director, Cavenwell Group who offer a wide range of fiduciary services in traditional wealth management and new finance such as products like tokenisation, agrees with Kerswill’s sentiment saying,”We are also witnessing considerable growth in the interest in foundations within the DIFC and ADGM, driven by a mix of GCC families, HNW/UHNW expatriates relocating to Dubai and Abu Dhabi, and international non-resident clients.

Nathan Taylor, Associate Director at the Praxis Group, a fiduciary and corporate administration company in the region adds his view, “The private wealth industry in the UAE is marked by several emerging themes. A key focus is the growing demand for asset protection amidst shifting geopolitical and economic conditions. There is also an increasing preference for trust and foundation structures, particularly in light of Dubai’s legal reforms and family offices are on the rise.” Taylor adds, “The UAE’s commitment to attracting global talent and capital has also spurred interest in private investment vehicles and funds, often for real estate and alternative assets. These trends are indicative of a more sophisticated and diverse approach to wealth structuring in the UAE.”

Surge in family offices and private banks

Horbury continues, “Enhanced Family Office regimes in both DIFC and ADGM are also fuelling a surge in Single Family Offices (SFOs), who are supported by the growing number of private banks and asset managers establishing presences within these markets.” New banks in the region include Santander Private Bank, Investec, Nuvama Private, State Street and Blue Owl Capital. They are a handful that have all opened in DIFC this year.”

Jacopo Crivellaro, former Legal Counsel at JFO Family Office and now Baker & McKenzie lawyer, consolidates the Dubai enthusiasm saying, “Dubai is solidifying its reputation as a global hub for the wealth management industry, particularly in an era marked by regional and international uncertainties. Over the past few years, there has been a significant influx of high-net-worth individuals, driven by legislative reforms. Key initiatives include the regulatory frameworks for family offices and progressive measures to streamline the succession planning of family-owned businesses.”

Jonathan Wheeler, Head of Middle East, Equiom adds his comments on family offices, “The well documented increase in the number of HNW and UHNW individuals relocating to UAE has been a catalyst for significant opportunities to restructure both personal and business assets as sophisticated investors either shift or establish their Family Office presence in the region.”

Investment management

Dr Naveed Ahmed, Principal and SEO, Imani Wealth Management who was previously a Managing Director of Credit Suisse in the Private Banking & Wealth Management division based in Dubai and who also worked at Bank Julius Baer discusses investments in the region. He makes an interesting point about over reliance on oil and gas investments, “Our view is that there is a large concentration of assets that are corelated with oil and real estate, leading to cyclicality and volatility in investment portfolios of GCC corporates, family offices and high-net worth individuals. We think that there is an opportunity to derisk the advisory process by focusing on NextGen themes that are technology centric: Robotics, Digital Health, Global Security, Fintech, AI and Climate Change. We want to identify businesses that will leverage technology to become market leaders.”

UAE family offices arriving in Hong Kong

A trend identified in a Citywealth article on Hong Kong and China described UAE individuals opening strategic offices in Hong Kong considered to be outside of the G7 countries and tied to the geopolitical tensions, but Crivellaro pushes back on this. “I read about one such incident involving a prominent UAE family wanting to open a family office, but I believe it was denied at a later stage. I haven’t seen a trend of UAE family wealth diversifying into Hong Kong or Singapore or outside the G7, on the contrary, it seems to be channelling back to the traditional G7 economies.”

Singapore residency changes create opportunity for Dubai

James Campbell, Partner, Ogier, who is based in Jersey says the residency changes in Singapore will also help Dubai. “The UAE also stands to benefit from the slow down in the creation of single family offices in Singapore which has since the pandemic seen material growth in the single family office space. Single family office applications to the regulator are taking longer to process with increased regulatory scrutiny and increased minimum fund requirements.  The Emirate of Dubai is offering a viable alternative for Asian families looking to establish single family offices with clear residency and relocation benefits.”

Real Estate

Horbury adds “Dubai’s thriving real estate market is underpinning this trend, with more favourable tax treatment for real estate held in foundations compared to companies.”

UAE Golden Visa regime

Alastair Glover​​​​, Partner, Stephenson Harwood says of the local visa programme,”The UAE Golden Visa regime has already attracted hundreds of thousands of skilled and high net worth migrants to the Emirates since its introduction in 2019. Pre and post the UK Budget, the Golden Visa regime coupled with zero tax on personal income and gains is generating a significant increase in interest from HNW and UNW clients looking for an alternative location to the UK prior to 6 April 2025. Global expats find the transition to the UAE relatively straightforward with English being the universal first language, world class infrastructure and excellent health care. For us, this has translated to a significant amount of additional work in advising families and family offices on immigration, UAE Corporate tax, real estate acquisitions and associated succession planning often utilising the DIFC and ADGM Trust and Foundation laws. These are all trends we expect to see continue.”  

Trusts and foundations

Emily Beirne, Principal, Kobre & Kim, says, “The trusts and foundations regimes in the Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC) are experiencing a significant surge of interest. This is driven both by new entrants to the region looking to safeguard their wealth and succession plans in the wake of recent geopolitical upheaval, as well as by those already operating within the Middle East. For individuals already in the region, we anticipate that this interest will continue to grow as awareness and acceptance increases of how these structures support long-term succession planning, particularly in comparison to traditional local inheritance and succession laws.”

Sharia law compliant trusts and foundations from Jersey, Channel Islands

Campbell adds a comment on Sharia law, “We have seen a significant rise in the use of UAE domestic structuring options in private wealth notably DIFC and ADGM foundations to hold UAE real estate and UAE operating businesses. Families are looking to domestic structuring options for certain assets but for international assets we continue to see substantive structuring mandates and opportunities using Jersey trusts, foundations and private trust companies which can allow significant control to be retained by the family. For Middle East clients a Jersey trust or foundation can also be Sharia law compliant if required. The Jersey legislation governing trusts and foundations is sufficiently flexible to enable the creation of trusts and foundations that are fully or partially compliant with Sharia law and the Islamic rules of inheritance and restrictions on investment.”

UAE see a British Virgin Islands and Cayman Islands offshore trend

Beirne explains foundations, “The foundation regimes feature strong ‘firewall’ provisions that shield the foundation from judgments of other courts that might threaten its existence or seek to otherwise attach the foundation assets using matrimonial or inheritance provisions from other legal systems. In this way, they provide greater certainty and facilitate generational wealth planning. We are beginning to see the use of UAE trusts and foundations within the structures we work with where there is a nexus to other offshore jurisdictions, in particular, the British Virgin Islands and Cayman Islands. We expect to see this trend continue as individuals, families and businesses seek more flexibility and greater commercial protections by using combinations of different offshore vehicles to better suit needs, within the Middle East and globally.”

Taxation changes

Anjarwalla adds his thoughts on taxation “Currently, there are no personal taxes payable by individuals on their investment income. However, if the individuals are undertaking business activities, then they may be liable to pay 9% corporate tax (subject to applicable exemptions).” He continues, “Dubai has emerged as a beacon for wealth planning amid rising political uncertainty and the UK’s evolving tax regime. With DIFC trusts, foundations, and holding structures, Dubai offers a good tax framework, robust regulation, and stability. Its thriving family office and wealth advisory ecosystem, combined with the lifestyle, quality education and business environment, positions Dubai as the destination of choice in uncertain times.”

Wheeler also adds, “In addition to this, the introduction of Corporate Tax in UAE has led to a seismic shift in attitudes towards succession planning – whereas once a simple holding company achieved the objectives of ringfencing certain asset types there are now a multitude of factors to consider for asset structuring, with the use of local foundations being a particular area of growth.”

On this topic Campbell adds, “The introduction of taxes in the UAE and the wider GCC. Corporation tax was introduced for the first time in the UAE from 1 June 2023 applicable to all businesses and commercial activities subject to certain exemptions. The UAE is taxing business profits with statutory rates at 0% and 9% which, whilst substantially lower than many jurisdictions, is an interesting development and evidences the UAE commitment to OECD anti-Base Erosion and Profit Sharing initiatives. It will also raise revenue for key UAE vision projects. In terms of personal taxes, Oman is scheduled to become the first GCC state to introduce a personal income tax with a levy range of between 5% to 9%. It seems likely that other GCC states will introduce further taxes to boost revenue, pay for infrastructure projects and diversify economies away from oil and gas.”

Virtual assets, wills and probate

M. Ali F. Khan, Consultant at AS Legal Consultants adds an interesting comment about digital assets and wills, “A couple of weeks ago the DIFC developed legal and technology infrastructure for virtual asset wills and probate. The question has historically been (and continues to be) how wills registries will view virtual assets which haven’t traditionally been seen as property –although the private keys have been. As the DIFC courts have now decided to class virtual assets as a third class of property, it has allowed them to establish infrastructure that allows for (non-Muslim) crypto holders to avail a mechanism which allows them to register their assets in non-custodial wallets, with a virtual asset will (as templated by the DIFC Wills registry) providing clarity over the manner in which the testator or testatrix would wish to distribute their legacy amongst their beneficiaries.”

Education and professional skills upgrade

Campbell enthuses further about Dubai and its benefits, “Having just returned from a business trip to the United Arab Emirates to see new and existing clients and to attend Ogier’s new DIFC office one year anniversary party it is fair to say that the UAE is booming on multiple levels. The pace of change is extraordinary.  Having a clear vision for the future coupled with the energy to make it happen is a powerful combination. In the UAE specifically we have seen significant investment in education domestically coupled with continued immigration with skilled and professional employees choosing to make Dubai and Abu Dhabi their permanent home for the future. The move from “transient” to “permanent” is very real and happening fast and we are seeing UHNW immigration into the UAE from far and wide. Globally we are also going through a titanic transfer of wealth from one generation to the next and the Middle East is no different. In the Middle East, there have been decades of wealth accumulation and the need for a clear succession plan for family operating businesses (which are prevalent in the region) and privately held assets is fundamental.”

Co-investments managed in Jersey Private Funds

“Another noticeable trend is that the scope of our legal instructions is becoming wider and more involved, we are increasingly advising families on long term strategy to preserve and enhance family wealth and to ensure an orderly transfer of wealth from one generation to the next. A final trend which looks set to continue is the increased use of co-investment vehicles or Jersey Private Funds (JPFs) for family members or multiple family branches looking to pool their capital with selected third parties. These structures have historically been institutional but the prevalence of private capital in the Middle East is making them increasingly attractive to UHNW families in the region.”

Conclusion

Whilst the news looks bleak for the West as assets move to warmer climes and Dubai enjoys digesting the influx of funds, there is still a ray of sunshine for the UK as some American UHNW’s are taking time to favour a European relocation to distance themselves from the Trump administration. In addition the recent tax changes also reveal a seed change for Dubai as organisations like the OECD bring to bear their pressure on tax competiveness.

The BVI, Cayman and Jersey, we have heard, will also benefit from planning from Dubai and this usually means some flow of investments into London. Whatever the future holds though, it certainly shines bright for Dubai.

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Estimated reading time: 13 minutes

For the global picture beyond Dubai, check our 2025 wealth trends.