Wealth managers from Asia are opening offices in Dubai in greater numbers as they take advantage of the improving diplomatic relations between China and the Middle East and anticipate a sharp increase in client demand for geographical diversity.
According to wealth managers, wealthy families and entrepreneurs from Asia—mainly from China—are choosing Dubai, a major financial hub in the Gulf region, as a place to base their operations and take advantage of advantageous policies.
One of China's leading wealth managers, Noah Holdings, which is in charge of about $23 billion in client assets, anticipates receiving a Dubai business license by year's end, according to Qing Pan, the company's chief financial officer.
He said that the Dubai office will assist Chinese business owners who are establishing themselves in that sector.
Noah has been tracking his clients' wealth growth as part of his strategy. Because of this, Pan stated, they will need to be there and manage the wealth generated locally. The company intends to send some employees from China at first and hire locals afterwards.
Many Chinese business owners are eager to take advantage of the opportunities presented by the Middle East and are searching for new markets as well as ways to diversify their supply chains.
Beijing has placed a greater emphasis on the Middle East as its relations with Washington have deteriorated due to disagreements on trade, technology, human rights, Taiwan, and other issues.
A number of factors, including the Middle East's neutral political position, ease of running businesses, convenient time zones, post-COVID economic recovery, and tax-free status, have made it a popular destination for wealthy people in recent years.
The 'golden visa' system is one of the incentives that the United Arab Emirates recently implemented. A 'family wealth center' was established in Dubai last year to assist affluent people and companies with cultural and governance-related concerns.
Consequently, western wealth managers, such as the Swiss private bank Lombard Odier, are seeking to increase their commercial footprint in the area in order to capitalize on the increasing number of affluent individuals and expatriates.
Investment opportunities
For a long time, rich people's main offshore wealth hubs in Asia have been Singapore and Hong Kong. However, wealth managers reported that some customers have begun to look to expand their investment horizons and diversify into new markets.
Based on Capgemini's wealth report in 2023, the number of individuals with a high net worth worldwide decreased by 3.3% to 21.7 million in 2022, while in the Middle East,it grew by 2.8% during the same year.
Data from wealth and immigration adviser Henley & Partners, located in Dubai, shows that the United Arab Emirates saw the largest net inflow of millionaires globally in 2022 and that the private wealth hub was expected to have acquired a net inflow of an additional 4,500 in 2023.
Farro Capital, a multi-family office based in Singapore, opened an office in Dubai last month, taking a chance on the trend. In the upcoming months, Dubai will also see the opening of an office for Landmark Family Office, a Hong Kong-based company. Cameron Harvey, the founder and CEO of Landmark, stated that clients from Southeast Asia, China, and Australia would be supported in finding investment opportunities in the Middle East through the company's Dubai office.
Only 1% of the average asset allocation is currently in the Middle East region, according to a recent survey of 76 single- and multi-family offices in Asia Pacific. Of those surveyed, 7% planned to increase their allocation.
The co-founder of Farro Capital in Singapore, Manish Tibrewal, noted that geopolitics is more important to families today than it has ever been. He added that Dubai's efforts to regulate virtual assets and its golden visa program have made the city more alluring.