March 2, 2024

Dubai emerges as top choice for family offices in the Middle East

Setting up family office in DubaiSetting up family office in Dubai

The UAE has become a hub for family offices and family businesses, with investor-friendly policies that have opened a gateway to global investors, according to Sheikh Abdulaziz bin Duaij bin Khalifa Al Khalifa. The sheikh recently hosted an event for family offices in the UAE and expressed his confidence in the unstoppable growth of the region, especially in sectors such as electric vehicles, vertical farming, renewable energy, manufacturing, natural resources, education and healthcare.

Al Khalifa’s private office has invested in and assisted companies in key economic sectors in the region. He sees more and more family offices and businesses allocating a significant percentage to impact-related companies and believes sectors whose mission is to be good and do good have the potential to implement and expand well in the UAE.

Haven for family offices

In recent years, the UAE has taken a leading position as an epicenter and haven for international family offices, businesses and high-net-worth investors to relocate their headquarters, making Dubai their newfound home for their staff and families. The measures of security taken for the well-being of UAE’s inhabitants are next to none, and this safety network only reassures further businesses to relocate to the region.

Ease of doing business

With the ease of relocating to the region, applying for visas, company licenses, appealing tax regimen, booming real estate, excellent schools, and healthcare, the UAE is becoming home for single-family offices, multi-family offices and great businesses. Al Khalifa’s Private Office has facilitated numerous family businesses and investors with their inception and networking with UAE’s families, and looks forward to assisting many more.

According to Lombard Odier, a leading global wealth and asset manager with a 50-year legacy in the Middle East providing wealth planning solutions, high-net-worth individuals (HNWIs) in the region are aware of the importance of effective succession planning, but less certain whether wealthy families have implemented the succession plans required to meet the varied needs of their complex family structures.

Related:   How family offices can safely navigate through digital transformation

Strong family governance

Given the outsized economic contribution of family-run businesses in the Middle East, strong family governance is critical for the region’s continued economic success. However, whilst 87% of the 300 HNWIs surveyed believe their family business is structured to allow for efficient intergenerational wealth transfer, only 24% say they already have an estate plan in place for all of their private assets.

The difference between younger and older business owners is significant. Over half of older respondents (55%) say they have a full estate plan in place, compared to just 9% of younger respondents. Conversely, more than one-third of younger respondents (36%) do not have any kind of estate plan in place at all but are interested in it, while a further 26% expressed no interest. The remaining respondents have a partial estate plan in place.

Protecting a family business with the proper legal, financial, leadership, and healthcare planning is essential for any family office or business. With this in mind, Al Khalifa is excited to host an exclusive gathering in the autumn for like-minded families from the UAE, Bahrain, Saudi Arabia, and abroad to come together in a safe environment to exchange their best practices and experiences.

Sharing experience and expertise

Al Khalifa believes that sharing expertise and exchanging notes on best practices in succession planning legally, financially, and humanly will make the community much stronger. By implementing a plan of action for successful family harmony, wealth, health, and leadership, long-term prosperity can be ensured ergonomically and nationally.

Family businesses can diversify and build sustainable businesses provided efforts are taken to remain focused and objective. Strained family dynamics can cost the family business money and eventually threaten its long-term generational survival. Family business unease, when repaired, improves the bottom line and ensures longevity.

Related:   Endeavor's investment in Twitter signals confidence in its growth potential

Cornerstone of the economy

Family businesses have been a cornerstone of the UAE’s economic success, and Sheikh Abdulaziz bin Duaij bin Khalifa Al Khalifa believes that they will continue to play a critical role in the country’s future growth. His private office has assisted companies in key economic sectors, and he sees promising potential in electric vehicles, vertical farming, renewable energy, manufacturing, natural resources, education, and healthcare.

Al Khalifa also recognizes the importance of strong family governance for the continued economic success of the region. With a passion for thorough generational planning, he plans to host an exclusive gathering in the autumn for like-minded families from the UAE, Bahrain, Saudi Arabia, and abroad to come together in a safe environment to exchange their best practices and experiences. By sharing expertise and exchanging notes on best practices in succession planning legally, financially, and humanly, families can become much stronger as a community.

However, just like any business, family businesses face unique challenges when it comes to generational planning. Protecting a family business with the proper legal, financial, leadership, and healthcare planning is essential for any family office or business. Yet, according to a recent survey by Lombard Odier, only 24% of HNWIs in the Middle East say they already have an estate plan in place for all of their private assets, despite 87% believing their family business is structured to allow for efficient intergenerational wealth transfer.

Challenges

This disparity is even more significant between older and younger business owners. Over half of older respondents (55%) say they have a full estate plan in place, compared to just 9% of younger respondents. More than one-third of younger respondents (36%) do not have any kind of estate plan in place at all but are interested in it, while a further 26% expressed no interest. The remaining respondents have a partial estate plan in place.

Related:   Dubai attracts Russians seeking to protect assets amid sanctions

This lack of planning can lead to strained family dynamics that can cost the family business money and eventually threaten its long-term generational survival. Family business unease, when repaired, improves the bottom line and ensures longevity.

Impact investing and ensuring that they give back to society is also essential for Al Khalifa and his private office, ingrained in their core beliefs. The UAE welcomes great startups and emerging businesses focused on making the UAE and the world a better place to live tomorrow.

The country’s firm leadership and vision that took center stage from the start of the pandemic have made it an attractive location for family offices and businesses to relocate their headquarters. With the ease of relocating to the region, applying for visas, company licenses, appealing tax regimen, booming real estate, excellent schools, and healthcare, Al Khalifa sees the UAE becoming home for single-family offices, multi-family offices, and great businesses.

The sheikh is not the only one who sees the UAE as a hub for family offices. According to a report by Campden Wealth, the number of family offices in the UAE increased by more than 10% in 2020. The report also noted that the UAE’s appeal to family offices was driven by several factors, including the country’s strategic location, investor-friendly policies, and tax incentives.

Al Khalifa’s vision for family businesses and generational planning in the UAE is inspiring. As the country continues to attract more family offices and businesses, it is essential that they prioritize effective succession planning and strong family governance to ensure their long-term success.

The upcoming gathering of like-minded families will undoubtedly provide a valuable opportunity for families to learn from one another and strengthen the region’s economy for generations to come.

By Mo Nabil

Mo Nabil is a finance columnist for Fund23 with a deep understanding of the Middle East financial landscape. With years of experience covering the region's financial industry, he is a respected voice in the field, known for delivering insightful and thought-provoking analysis. His articles and columns offer valuable insights into the latest trends and developments shaping the region's economy, making him a go-to source for readers seeking expert perspectives on Middle East finance.

Related Post