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The inflow of global wealth into the UAE comes across as a natural progression. This is making for extremely fertile ground for family offices. Image Credit: Shutterstock

The ascent of family offices in the Middle East signifies a profound shift in wealth management amidst the dynamic growth in global finance.

In the Middle East, family offices trace their origins to the traditional wealth management practices employed by affluent families. Historically, family wealth centered around gold, real estate and local commercial ventures, with traditions deeply influenced by cultural, social, and religious significance.

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As the global financial landscapes evolved, a shift towards sophisticated and organized financial management emerged. This was propelled by the need for worldwide investments, economic diversification, and an increased focus on succession planning within family enterprises.

Economic transformation

Family offices have assumed a more significant role in the Middle Eastern economy, with their contribution at over 60 per cent of GDP in many countries. The UAE has experienced a rise in new family offices, attracting wealthy families from around the world who recognize the opportunities available in the region.

According to KPMG, UAE’s financial wealth, generated by ultra-high networth individuals and family offices is forecast to increase 46 per cent by 2026. It is estimated that the overall UAE’s financial wealth will continue to grow at a compounded annual rate of 6.7 per cent and reach $1 trillion by 2026.

The UAE has emerged as a focal point for family offices, owing to advantageous tax regulations, a robust banking sector, and strategic benefits. Wealth management strategies have evolved from traditional focuses on local businesses, gold, and real estate to encompass more complex and diverse portfolios.

The efforts of Middle Eastern countries to diversify their economies have reaped substantial benefits beyond the conventional oil and gas sectors.

Cooperation across borders

A noteworthy aspect of this evolution is the global collaboration among family offices. Through cross-border cooperation, a global community committed to constructing a prosperous future is taking shape. At our recent Family Office Round Table event themed ‘Abundance for the Future’, family offices break stereotypes and share an inspiring story of collective success.

This collaboration extends beyond individual families, positively impacting entire nations and the global socioeconomic system. Resolving conflicts, participating in sustainable projects, and enhancing the economies of respective countries are integral aspects of this collaborative relationship.

Shared principles like accountability, sustainability, and a commitment to positive change are embedded in this joint legacy.

UAE sets the standard

Over the next three years, family offices and ultra-high networth individuals are likely to contribute $500 billion to the UAE's economy, driving significant financial expansion. Middle Eastern family offices prioritize succession planning, maintain investments in infrastructure and energy, and embrace innovative investment strategies, including impact and ESG investing.

The trend of family offices in the Middle East signifies a departure from conventional wealth strategies towards advanced global wealth management. A lasting legacy is forged as family offices worldwide collaborate in a concerted effort to shape a future characterized by sustainability, accountability, and prosperity.

Shared cultural roots and ideals, coupled with substantial market growth, underscore the equitable wealth stemming from global collaboration. In this era of cooperative wealth management, family offices transcend their financial roles, becoming strategic partners for societal and economic benefit in the long run.