{"id":837,"date":"2024-05-20T12:18:43","date_gmt":"2024-05-20T12:18:43","guid":{"rendered":"https:\/\/iqeq.com\/in\/insights\/why-the-middle-east-is-seeing-a-boom-in-family-offices\/"},"modified":"2025-12-10T10:59:27","modified_gmt":"2025-12-10T10:59:27","slug":"why-the-middle-east-is-seeing-a-boom-in-family-offices","status":"publish","type":"post","link":"https:\/\/iqeq.com\/in\/insights\/why-the-middle-east-is-seeing-a-boom-in-family-offices\/","title":{"rendered":"Why the Middle East is seeing a boom in family offices"},"content":{"rendered":"
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Across the Middle East, the number of ultra-high-net-worth (UHNW) individuals and families is rising rapidly. According to Knight Frank\u2019s 2024 Wealth Report<\/strong><\/a>, there were around 18,800 UHNW investors in this region of the world in 2023, an increase of 6.2% on the year before. Fuelled by this upward trend in wealth, family offices across the region are proliferating. These entities are enabling affluent individuals and families to optimise their investment portfolios while simultaneously addressing important wealth management issues, such as succession planning, intergenerational wealth transfer, and philanthropy.<\/p>\n

An attractive location for family offices<\/h2>\n

The Middle East has a lot to offer those looking to establish a family office. For a start, it\u2019s home to a number of the emerging financial hubs. For example, there\u2019s the Dubai International Financial Centre (DIFC) \u2013 a special economic zone that is known for providing best-in-class, tailored services to family businesses and UHNWIs. There\u2019s also the Abu Dhabi Global Market (ADGM) \u2013 an award-winning international financial centre that is known for its vibrant investment ecosystem. Additionally, there\u2019s Riyadh in Saudi Arabia, which has a long-term vision to establish itself as a leading financial centre, and Tel Aviv in Israel, which has a well-developed financial sector and a rapidly growing financial technology (FinTech) industry.<\/p>\n

The regulatory backdrop is also favourable. The DIFC, for instance, recently introduced \u2018Family Arrangements Regulations\u2019<\/a>, which allow family offices in the UAE to operate without registering with the Dubai Financial Services Authority (DFSA) as a \u2018designated non-financial business or profession\u2019. We\u2019ve also seen the UAE roll out new legislation known as \u2018Family Business Law\u2019<\/a>. This aims to support the continuity of family businesses and enhance their role in the private sector, including the sustainability and growth of family businesses. Among other more specific objectives, the Family Business Law aims to<\/a> set an inclusive, easy legal framework to regulate ownership and governance of family business, facilitate their transfer between generations, and provide proper mechanisms for resolving disputes.<\/p>\n

Another major plus is the compelling tax landscape. In the UAE, there\u2019s no personal income tax or capital gains tax. There\u2019s also no inheritance tax. This combination of tax benefits makes the country an attractive location for families seeking to preserve and grow their wealth across generations.<\/p>\n

The Middle East can offer investors many wealth creation opportunities because of its location between Europe and Asia. As such, we\u2019re seeing an increase in family offices from Europe, Asia, India and even the U.S. setting up bases in the region. American hedge fund investor Ray Dalio, for example, recently opened a branch of his family office in the ADGM. This branch will oversee a range of activities, including Dalio family investments and philanthropic efforts.<\/p>\n

Holistic wealth management services<\/h2>\n

One of the main benefits of establishing a family office is that they’re able to offer UHNW individuals and families more than just investment management services. From intergenerational wealth transfer<\/a> to legal services, they can offer wealthy families a holistic approach to wealth management. Today, succession and leadership transition are some of the top priorities for family offices in the Middle East, according to Deloitte<\/a>. This is understandable as around $1 trillion in assets across the region is set to be transferred to the next generation by 2030<\/a>.<\/p>\n

Furthermore, Investment management remains a key area of focus. According to Agreus Group, total assets under management by Middle Eastern family offices could surpass $500 billion by 2025<\/a>. In terms of asset classes, commercial real estate remains popular, with Knight Frank\u2019s 2024 Wealth Report predicting that Middle Eastern UHNW investors will be quite active in the space this year. Yet as investors seek to diversify their portfolios, alternative investments such as private equity, venture capital, and hedge funds are also gaining interest (the DIFC is currently seeing a record number of hedge fund registrations). Additionally, Islamic finance principles are a key consideration for Middle Eastern family offices when building portfolios. So, investments in Sharia-compliant asset classes and investment products \u2013 which allow traditional Islamic investors to participate in the world\u2019s capital markets \u2013 are very common.<\/p>\n

Family offices are embracing technology<\/h2>\n

It\u2019s worth pointing out that Middle Eastern family offices are increasingly embracing technology today. In the pursuit of excellence, firms are seeking out technology solutions that can elevate their investment management practices, improve operational efficiency, and enhance client services. They\u2019re also proactively investing in cybersecurity solutions to safeguard financial data and sensitive client information. Ultimately, firms are realising that a robust operational infrastructure is key to success.<\/p>\n

Attractive long-term outlook<\/h2>\n

Looking ahead, the Middle Eastern family office market is expected to continue flourishing, fuelled by rising wealth in the region. A growing appetite for alternative investments and demand for holistic wealth management services are also likely to be long-term growth drivers. According to Knight Frank\u2019s 2024 Wealth Report, the number of UHNWIs across the Middle East is set to increase by nearly 30% between 2023 and 2028. So, it\u2019s likely that demand for family office services will be high in the years ahead.<\/p>\n

Why set up your family office in the Middle East?<\/h2>\n