UAE’s resident base of millionaires is rising - and creating more growth dynamics

The UAE is set to attract 4,000 plus millionaires this year, as per the latest reports on global immigration and wealth shift trends.

The Middle East as such is witnessing a solid and sizeable focus shift from oil to non–oil based projects. Led by Saudi Arabia and the UAE, these countries are trying to woo capital and talent into other oil sectors.

In UAE’s case, special efforts and laws have come up to make the country truly investor-friendly. The passage of multiple rules in the social, economic, and legal sectors to boost investor confidence has seen the global elite flocking to Dubai and Abu Dhabi.

While significant law amendments have been going on since pre-Covid times, the efforts are now starting to bear fruit at a holistic level. This is visible in the form of an increased expat population base, a rising real estate demand, and growth in the millionaire population here. As of 2022, Dubai ranked 20th in the world for HNWIs (registering a 68 per cent year-on-year- growth).

The numbers will likely be one of the highest growth rates globally by year end…

So, as the overall wealthy population grows, we look at the notable impacts.

Growing allure for wealth management

The natural consequence of the rising base of the affluent is the demand for wealth management. The UAE is fast attracting the attention of family offices and wealth funds. In April, Ray Dalio’s Bridgewater Associates set up a branch in Abu Dhabi. Other notable hedge funds that have come include Hudson Bay Capital, Millennium Management, Exodus Point Capital Management, and Verition.

As of the latest estimates, the DIFC has around 60 hedge funds waiting to be registered with assets under management of $1 trillion plus. Estimates now put a combined wealth value of about $8 trillion + for the MENA, African and South Asian regions.

Bottom-line: Opportunities are plenty.

Real estate enters a new phase

There is an old proverb to the effect that ‘He is not a full man who does not own a piece of land’. Perhaps no other city epitomises this proverb better than Dubai. The renal rate increase has surpassed the overall price appreciation gains on a year-on-year basis.

This is happening across the board – for old townships and new residential blocks. To put things into perspective, Dubai’s residential and commercial sectors witnessed a 47- and 30 per cent jump in the H1-2023 sales on a year-on-year basis.

Dubai’s luxury real estate market is now defying global trends, with even sand plots sold for millions of dirhams on the Palm islands.

Bottom-line: For a longer term, renting becomes expensive compared to owning your own house.

New-age industries

Blockchain, crypto and AI are new-age themes the world has become fixated on. In Dubai and Abu Dhabi, the ultra-rich will likely explore new avenues of business in such domains. The exploration will also establish new rules to better serve the sector. The UAE is now home to 4,000 startups, with Dubai home to 40 per cent. By some estimates, the Dubai startup industry attracted $ 2 billion in funding last year.

Bottom-line: More new entrants could enter, backed by the flexible laws and lower tax rates.