It is no secret that the UAE has long been a popular destination for the affluent. However, it seems the number of hyper-rich coming to the country is set to escalate. A recent study, published in the Henley Global Citizens Report for 2022, predicts that the UAE could attract the highest number of millionaires this year.
“The UAE exceeded our 2022 forecast of a net inflow of millionaires, with the final actual figure by the end of December being 5,200,” says Philippe Amarante, Managing Partner, Head of Henley & Partners Private Clients DMCC. “We expect to see a similar trend this coming year as more hedge fund managers are opting to relocate to Dubai, given the emirate’s good infrastructure, low taxes, and light regulation.”
Due to the abundance of lifestyle benefits, the UAE is attracting residents who may have previously chosen to relocate to countries such as the UK, Australia or Switzerland.
“There are many reasons wealthy individuals move to the UAE, an international business hub with a high-income economy and a reputation for being the safe oasis in the Middle East and Africa,” adds Amarante. “The country is strong in numerous key sectors including financial services, oil and gas, real estate, tourism, and technology, with a first-class healthcare system.”
While the standard of living might be attractive, this growth in HNWIs can also be credited to the successful handling of the pandemic.
Alireza Valizadeh, Chief Executive Officer, Julius Baer Middle East, says, “The recent influx of wealth into Dubai is a testament to the resilience of the city. The way the authorities in Dubai managed the Covid-19 pandemic, handing out free vaccinations to citizens and residents alike while managing to successfully organise a mega event such as Expo 2020 was inspirational.”
What is interesting, however, is that the pandemic didn’t only affect emigration choices. It also influenced the way HNWIs in the region considered investments.
“The pandemic has brought to the forefront the need for structured wealth and succession planning,” explains Valizadeh. “It’s put a spotlight on an important topic in an UHNWI’s or HNWI’s wealth journey, especially if you are a second- or third-generation family business. We see more and more clients focusing on these aspects including that of educating the next generation on the wealth transfer process. One of the key factors that have come into prominence is the need for diversification and how we as private banks can support that with expert advice.”
At Mashreq Bank, there are similar sentiments as to what the wealthy are looking for when it comes to their investments.
Vipul Kapur, Head of Mashreq Private Banking, says, “More than ever before, the fact that private banking is a long-term holistic experience is relevant to the influx of HNWIs in the UAE. The focus has shifted from investment products to understanding clients, addressing their needs and offering integrated solutions. We are looking at managing a bigger, complete picture of our clients — family, occupation, financial planning, retirement, succession and wealth transfer as well as philanthropy, and other compassion projects.”
According to a Lombard Odier survey last year, nine in ten HNWIs hold their wealth in the Middle East and this is expected to continue over the next few years. Therefore, despite generally tepid economic growth around the globe and some banking sectors witnessing difficult times, private banking in the region continues to witness demand.
“The rise in the number of HNWIs has significant positive implications on the UAE’s private banking sector,” says Ayesha Abbas, Managing Director, Head of Consumer, Private and Business Banking, at Standard Chartered UAE.
“The influx of HNWIs to the UAE led to an increase in the demand for specialised financial services and wealth management solutions. It also resulted in attracting top talent from across the globe, which accelerated investment in human capital by private banks and wealth managers to serve the growing sophisticated needs of HNWIs.”
Global banking giant HSBC is also adjusting to the current business requirements.
Farzad Billimoria, Senior Executive Officer and Head of Private Banking UAE, HSBC, says, “HSBC has been operating in the UAE for 77 years, and we’ve seen growing international client demand for expanding our private banking offering here. We’ve responded to that demand by streamlining our onboarding and wealth management processes. Furthermore, we have matched the growing influx of customers to this market with an increase in relationship manager coverage and the creation of our onshore private bank last year, which became the eleventh international private wealth centre operated by HSBC.”
The expected arrival of more HNWIs in the near future shows no sign of abating. Thanks to the way the UAE government handled the Covid pandemic, it has reassured investors that even in a crisis this is the place to be.