Along the route of Sheikh Zayed Road — the largest road in the United Arab Emirates, which runs parallel to the Persian Gulf — lies the Dubai International Financial Centre (or DIFC). In the bowels of this cluster of buildings, where the regional headquarters of CaixaBank and Santander have coexisted with those such as Saudi Telecom (STC), lies the cradle of the Emirati commitment to the financial industry: up to 5,523 companies are based in this district. Now, the Government is looking beyond the large corporations and has put the spotlight on the great fortunes managed by the family offices, firms dedicated to managing multi-million dollar family assets.
Dubai has always been an ideal destination for people ultra-rich (also known as high net worth individuals), and in the last year this privileged population has reached 72,500 people, compared to 68,400 in 2023. The center already has more than 600 families with a total wealth of one trillion dollars, and has granted more than 150,000 visas between 2019 and 2022. With this base, the emirate aims to attract wealth management offices to this exclusive economic zone, and has in fact already launched a specific initiative: the DIFC Family Wealth Centre. The requirements are one million dollars (922,840 euros) in cash, and a minimum of 50 million dollars (46 million euros) in assets to register in this exclusive club.
In return, the wealthy gain several advantages from the centre, including the relative secrecy it offers: in some cases, even the law firms working with the applicant do not know their name. Jacques Visser, legal director of the DIFC authority, explains that the privacy of the entity is “impossible to circumvent, with no remote access possible”. The emirate also offers a low corporate tax (9%) as well as private dispute resolution, subject to British law applicable throughout the economic zone to ensure security for investments. Exclusive services such as succession planning are also offered. These measures have boosted office rents in the DIFC by 129% in the past three years, according to the real estate company Knight Frank.
Dubai’s glitz and luxury have lost some of their steam with wealthy Russians, who just two years ago – after the outbreak of war in Ukraine – fled to the emirate. The United Arab Emirates, a five-hour flight from Moscow and which to this day has no sanctions on ordinary people brandishing Russian passports, has been an attractive option for investors fleeing the war. At first, this wave of investors looking for a place to park their assets set up their own businesses, from real estate to cake shops. Hair salons offering Russian-style services took root, such as Sugar Dubai, with 87 franchises in Russia, or Babochka, a beauty salon in the financial district whose name is borrowed from the Russian word for “grandmother.” Several multinationals also moved their headquarters. They fueled a property boom that sent prices soaring 30% in the next two years, according to brokerage CBRE Group.
But the picture is different today. Migration data from Henley & Partners projects that just 1,000 Russian millionaires will move abroad this year, a fraction of the 11,300 wealthy individuals who have fled the country in the past two years. Western pressure on local banks to impose more restrictions on Russian nationals has begun to complicate the relatively lax lifestyle in the desert country. For the first time in almost three years, Russians were no longer the main buyers of the 187,000 houses and apartments sold in Dubai this year, according to data from the Emirati brokerage Driven Properties.
Who are the new neighbours? The biggest buyers at the end of 2023 were millionaires of Indian nationality, according to the real estate company Betterhomes. This wave of purchases can be attributed to the projected departure of 4,300 millionaires that the emirate expects from New Delhi. However, the majority of the millionaires expected in the emirate this year will be among the 15,000 expatriates from China who are expected to leave their country, fed up with Xi Jinping’s economic measures. “The centre has welcomed a large influx of high-net-worth families of Indian descent,” Visser confessed, although he did not specify the figure. “We have seen that large and well-known families have arrived in Dubai, and I will say that the interest from Asia is a little greater, but also from Europe.”
Visser, asked by this newspaper about the percentage of signatures and family offices Spanish companies registered under the entity, he replied that the centre “does not keep a record of the final beneficiaries. We do not publish the nationalities of the families in the DIFC” although he added that “there is a healthy interest from Spanish investors and we have seen this for some time.” Currently, there are 45 franchises of Spanish companies throughout the country, according to data provided by the Emirati government.
The legal director also touched on the issue of being in the crosshairs of the Financial Action Task Force (or FATF), although the Emirate was removed from the money laundering ‘grey list’ in February of this year. “We are not a jurisdiction offshore” has defended, “We have always been flagged by the FATF and we always take it very seriously. We carry out a very thorough process against money laundering.”
Although Dubai has increased its millionaire population by 78% over the past decade, according to estimates by Henley & Partners, it faces emerging competition from the Persian Gulf. Saudi Arabia is further expanding its sphere of influence. Investment Minister Al-Falih visited Spain last week. The Saudi kingdom has been successful in capturing corporate headquarters after trying to convince multinationals with offices in Riyadh to move their regional headquarters to the country to keep their licences and win lucrative contracts.
The city is also competing on its own turf. 138 kilometres away, Dubai is up against Abu Dhabi, another emirate, for foreign investment. Located on Al Maryah Island, the Abu Dhabi Global Market (ADGM), the Saudi equivalent of DIFC, has more than 95% of its offices occupied, sources from the entity itself have informed Bloomberg. The island is at full capacity. Abu Dhabi has become the fastest growing financial centre in the Middle East over the past two years.
Philippe Amarante, managing partner of the migration consultancy Henley & Partners, who is responsible for the region, rejects this idea of competition between the Gulf countries. “It is not about choosing one or the other,” he said. “It is not about creating exclusive structures, but about optionality.” Amarante pauses: “Do you think a family today really wants to move to London?”
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