Syrians have always been prepared for a flight to safety
David Freeman, consultant at Thomas Eggar, says owning a property in London gives the Middle Eastern UHNW individuals access to important contacts, convenient lifestyle, and security.
Define political risk for UHNW Middle Eastern clients?
Political risk for clients from Middle East is about security and the long term safety of their families as much as it is about money. The chaos in the region has reminded families of the need to plan.
Many wealthy families from Syria had the bulk of their wealth outside the country and the necessary visas and passports in place years before the recent war there.
Some families plan and have sons or daughters in various locations across the world, providing comfort to those still at home, knowing there is somewhere to go. It’s a deliberate policy for some UHNW families.
The private wealth industry thrives on clients fleeing uncertainty. However, a compromise is needed as clients have to choose between the transparency and bureaucracy that comes with connections, residences and activity in stable countries and the impact those rules have on their local lives.
It is getting more complicated for people to juggle their lives between the activity that has generated the wealth and the need to disclose and report that activity in foreign countries.
Middle Eastern money has predominantly come to London looking for trophy assets. Recent property laws have curtailed some activity but the trend continues. Do they buy here to hedge political risk and instability in the region or just because they can and for lifestyle?
Owning a property in London conveys status. There is an unspoken London club and joining the Middle Eastern community here brings access to contacts, membership of boards, invitations to charity events and friendships.
So they buy because UK residential property has been a good investment in the past, provides security and access to a lifestyle and membership of an interesting club.
What trends do you see in the Middle Eastern market for UHNW’s that you could tell us about?
I think families are planning further ahead, looking at multi-generational structures and building philanthropy into their family arrangements.
Years ago a client from the Middle East who lived in London told me that he regretted structuring all his business and property through offshore companies and trusts.
I asked why? Tax had been saved, assets protected, why was he not happy? He said that planning is more about security, being free to travel and live. The tax tail is important but it doesn’t wag the dog any more.