As diplomatic relations between China and the Middle East improve, more Asian wealth managers are opening offices in Dubai in anticipation of a spike in customer demand for regional diversification.
Wealth managers stated that as more entrepreneurs and wealthy families in Asia, primarily from China, seek to develop their enterprises and take advantage of Dubai’s investment-friendly regime, the Gulf’s financial epicentre transforms itself into the world’s new wealth hub.
As per Reuters, Noah Holdings, one of China’s leading wealth managers in charge of about USD 23 billion in client assets, plans to obtain a business license in Dubai by the 2024 end.
According to Qing Pan, the company’s chief financial officer, Chinese business owners who are establishing themselves in that market will receive assistance from the Dubai office.
“Noah’s approach has been to track his clients’ wealth increases. Because of this, we will need to be present and manage the money created locally,” Pan stated, saying that the company intends to hire locals first and deploy some employees from China.
“Many Chinese businesspeople are interested in the opportunities the Middle East offers and are searching for new markets and diversifying their supply chains,” the official remarked further.
Beijing has placed a greater emphasis on the Middle East as its relations with Washington have deteriorated due to differences in trade, technology, human rights, and Taiwan, among other topics.
Several factors, including the Middle East’s neutral political position, ease of doing business, 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 (UAE) recently implemented. A ‘family wealth centre’ was established in Dubai in 2023 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 to capitalise on the increasing number of affluent individuals and expatriates.
Areas For Investment
Singapore and Hong Kong have traditionally been the top offshore money hubs in Asia. However, according to wealth managers, some clients are now looking to diversify into other markets and learn about new investment options.
According to Capgemini’s 2023 wealth report, the number of high net worth individuals (HNWI) decreased 3.3% globally to 21.7 million in 2022 but climbed 2.8% in the Middle East.
According to data from Dubai-based wealth and immigration consultancy Henley & Partners, the UAE saw the largest net influx of billionaires in the world in 2022, and the private wealth hub was projected to have received a net inflow of an additional 4,500 in 2023.
Farro Capital, a multi-family office located in Singapore, opened an office in Dubai in December 2023, taking a chance on the trend. Following its 2022 Dubai debut, Patrick Tsang, chairman of the Hong Kong-based single-family office Tsang Group, announced plans to open new offices in Abu Dhabi and Riyadh, Saudi Arabia, this year.
Japan’s Nomura has already launched its international wealth management business in Dubai, apart from opening a new office in the Emirati city. The bank now has a Category 4 license from the local regulator and will primarily serve high-net-worth individuals, single-family offices and external asset managers in the UAE and broader Middle East region.
German banking major Deutsche Bank too has made a set of appointments in its wealth management and private banking businesses in the broader Gulf region.
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 China, Southeast Asia, and Australia would be assisted in finding investment possibilities in the Middle East using the company’s Dubai headquarters.
In a recent survey conducted by Campden Wealth and Raffles Family Office, 76 single- and multi-family offices located in Asia Pacific were found to have an average asset allocation of just 1% to the Middle East area, with 7% of the respondents planning to increase that amount.
“We live in very interesting times where geopolitics has become more critical to families than ever before,” said Manish Tibrewal, a co-founder of Farro Capital in Singapore, while interacting with Reuters. He said that Dubai’s push to regulate virtual assets and the golden visa programme, among other things, has increased the city’s pull.
Expect the Dubai International Financial Centre to become the new global hub for wealth management businesses.