We are pleased to share our latest article, which has been published on Wealth Briefing
By Sergei Grechkin
Chief Risk Office of AIFM Cayros Capital
30/05/2024
Dubai And UAE: The New Vanguard Of Family Offices, Wealth Management
Strategic initiatives, and reforms
The UAE has introduced several measures, such as the “golden visa” system and establishing a “family wealth center” in 2023, to support affluent individuals and businesses with governance and cultural issues. The former grants long-term residency to eligible investors, entrepreneurs, and professionals. The latter supports wealthy families to manage their assets and address governance and cultural issues unique to well-off families. Initiatives like this aim to draw Western wealth managers to the region, leveraging the growing number of wealthy individuals and contributing to the UAE’s economic growth.
Collaborative environment for strategic alliances
Dubai offers a collaborative environment that enables family offices to forge strategic alliances, explore joint investment ventures, and access exclusive deals. This synergy between various stakeholders fosters knowledge sharing, idea generation, and wealth creation through partnership.
Moreover, introducing the DIFC Family Arrangements Regulations 2023 emphasizes Dubai’s commitment to facilitating the efficient management and governance of family wealth. These regulations provide a framework for family offices to establish legal arrangements addressing their specific needs, enhancing transparency, stability, and trust within the family office ecosystem.
Successful family offices in Dubai
Several family offices have thrived in Dubai, benefiting from its strategic location, robust economy, and favorable tax environment. Notable examples include HB Investments, Kaaf Investments, and El Daba Holdings. These entities illustrate the potential for wealth management, preservation, and investment in Dubai.
Attracting international wealth managers
According to data from Dubai-based wealth and immigration consultancy Henley & Partners, the UAE saw the most significant net influx of billionaires in the world in 2022, and the private wealth hub was projected to have received a net inflow of an additional 4,500 in 2023.
Farro Capital, a multi-family office located in Singapore, opened an office in Dubai in December 2023, taking a chance on the trend. Following its 2022 Dubai debut, Patrick Tsang, chairman of the Hong Kong-based single-family office Tsang Group, announced plans to open new offices in Abu Dhabi and Riyadh, Saudi Arabia, this year.
Dubai will also see the opening of an office for Landmark Family Office, a Hong Kong-based company. Cameron Harvey, the founder, and CEO of Landmark stated that clients from China, Southeast Asia, and Australia would be assisted in finding investment possibilities in the Middle East using the company’s Dubai headquarters.
According to The Asia-Pacific Family Office Report 2023 from Campden Wealth and Raffles Family Office, APAC FOs exceeded investment performance expectations in 2022. Despite the challenging economic landscape, family offices reported AuM growth, with 22 per cent experiencing an increase of more than 10 per cent.
“The leadership landscape in APAC family offices is undergoing a dramatic generational transition. Currently, 15 per cent of these offices are led by the next generation, projected to surge to 47 per cent in the next five years. This shift signifies a profound change in the region’s investment and management strategies, marking a new chapter for family offices in Asia-Pacific,” Chi-man Kwan, group CEO and co-founder of Raffles Family Office, said.
Challenges for Dubai and the UAE in attracting the affluent
While Dubai and the UAE have made significant strides as a premier destination for family offices and wealth managers, several challenges could impact their growth and operational effectiveness.
— Regulatory complexity and compliance. Even with the UAE’s efforts to streamline regulations, navigating the legal and tax frameworks can still be difficult. The complexity of compliance, especially for foreign entities unfamiliar with local laws, necessitates expert guidance and can lead to potential hurdles in establishing and operating family offices.
— Talent acquisition and retention. The expansion of the wealth management sector has led to a high demand for skilled professionals. Attracting and retaining top talent remains a significant challenge, necessitating structured compensation and long-term incentive plans.
— Geopolitical risks. While the UAE is considered relatively stable, the broader Middle East region is susceptible to geopolitical tensions that could impact investment climates and operational security for family offices. Investors must remain vigilant and adopt robust risk management strategies to navigate these uncertainties.
— Market saturation and competition. As more family offices and wealth managers establish themselves in the UAE, the market could face saturation, leading to increased competition for investment opportunities. This competition could drive up costs and diminish the returns on investment, particularly in popular sectors such as real estate and private equity.
— Technological adaptation and cybersecurity. The push towards digitalisation presents both opportunities and challenges. Family offices must invest in technology to enhance operational efficiency and service delivery. However, this digital transformation also exposes them to cybersecurity risks, requiring substantial investments in security infrastructure to protect assets and sensitive information.
The trend will take place In the future
Despite these challenges, the UAE’s strategic initiatives, investment opportunities, and the supportive ecosystem for wealth management continue to attract global family offices and wealth managers. The transition of Dubai and the UAE into international hubs for family offices and wealth management is the result of their strategic vision, regulatory reforms, and commitment to creating a conducive environment for investment and wealth preservation. These efforts have positioned the UAE as a valley for the ultra-rich, offering unmatched growth potential and a quality of life that appeals to the world’s wealthiest individuals.
28/05/2024
Location: Nicosia, Cyprus
AIFM Cayros Capital recently attended the IX Best Invest Cyprus Congress in Limassol. Every year, the event attracts a wide range of participants, including government officials, key market players, investors, business leaders, and members of the media.
This year, the congress featured an enriching agenda on the economy of Cyprus and the investment landscape as a whole. The sessions included:
- Economic Outlook and Prospects of Cyprus
- Investments in AI-Related Business
- Bilateral Investment Potentials of Cyprus
- Real Estate Projects presentation
As an active participant in the Cyprus Fund Industry, we found the insights shared by industry experts during the panel invaluable. This reinforces our confidence that we are well-equipped to drive progress and achieve our objectives despite the significant gap between Cyprus’s private and public sectors.
