Offshore

Dubai Government Doubles Down In Attracting Onshore, Offshore Wealth

Tom Burroughes Group Editor London 1 February 2023

Dubai Government Doubles Down In Attracting Onshore, Offshore Wealth

We talk to the government in Dubai – at its economic and tourism department – about its objectives for the jurisdiction's financial services hub and how it fits into the wider region, and beyond.

This news service has spoken to Hadi Badri, chief executive, Economic Development, Dubai Department of Economy and Tourism, about how the jurisdiction is evolving as a financial and wealth management hub, and some of the wider considerations for Dubai’s place in the world. This article follows an interview with the CEO of the Dubai International Financial Centre Authority earlier this week, and is an example of the developing coverage of the MENA region by this news service. 

As far as wealth management is concerned, what are Dubai’s main objectives as a regional wealth hub? 
After securing its position as the largest financial ecosystem in the Middle East, Africa and South Asia region, Dubai is now working towards its next priorities and objectives, which include increasing the value of local wealth managed onshore in Dubai, increasing offshore private financial assets booked in the Emirate and boosting the contribution of its financial sector to GDP. Dubai is now doubling down on its drive to attract financial institutions, high net worth individuals and global family businesses by putting new plans and initiatives into action.

The introduction of long-term residency and virtual working visas was a major step forward and these advantages are resonating with HNW individuals. A new report from New World Wealth and Henley & Partners revealed that Dubai recorded an 18 per cent increase in high net worth individuals in the first six months of 2022.

Dubai International Financial Centre (DIFC)…is home to 25 of the world’s top 30 global, systemically important banks, six of the top 10 asset managers, the top advisory and many global law and accounting firms.

Currently, DIFC banks hold approximately $200 billion worth of assets, while DIFC asset managers oversee more than $450 billion of assets under management, and the goal is to see those values grow significantly. For DIFC, this proposition is translating into very strong results too as 537 new companies joined DIFC in H1 2022, with fintech and innovation-focused businesses accounting for a large share of the newer companies setting up. 

Additionally, the Dubai Financial Market (DFM) has become one of the most active financial markets globally in terms of new IPOs and listings this year. This momentum underscores the sound fundamentals of the economy in Dubai and the UAE, which have strengthened confidence in the market among regional and global investors. While IPO performance in other global markets has not been positive over the last year, IPO markets in Dubai and the UAE have managed to buck this trend. 

In 2021, the DFM rose by over 28 per cent and Dubai itself has committed to increase the total volume of its stock markets to AED3 trillion ($816.8 billion), and in 2022 a total of $8.4 billion was raised through IPOs, which saw demand in excess of $180 billion from local and international investors. In this regard, we are all about continuing to build on this growth and momentum and unlock the potential of the market and pave the way for private sector IPOs. We see good interest from private sector participants and our priority is to ensure that we offer them the right platform, connectivity, and accessibility to the market as well as further enhance the ecosystem in partnership with market participants. Establishing the AED2 billion market making fund was an important first step taken in 2021 to boost trading on Dubai’s stock market and enhance its competitiveness among bigger bourses in the region. 

Considerable progress has been made in listing a number of government and state-owned companies on the DFM, while DET has focused its efforts over the last year on encouraging private and family-owned businesses to get listed on Dubai’s bourse. We also want to evolve, so revision of market policies to allow better accessibility to all stakeholders and focus on ESG and market transparency are key priorities moving forward.

Lastly, both DIFC and Dubai Chambers recently announced plans to establish dedicated centres to support family-owned companies and HNW individuals with everything from advisory services and networking to dispute resolution, market research and corporate governance. While these plans are still in the pipeline, their main objectives are to drive the growth of the financial sector by developing and streamlining unique services to family-owned businesses, private wealth offices and UHNW individuals operating under one hub or centre.

When looking at the development of Dubai as a wealth hub and a place for HNW families to locate, set up family offices, etc, how are you measuring “success”? What sort of metrics are you using (assets under management, employees, revenues, types of business, other)?
The Dubai Department of Economy and Tourism (DET) is implementing a holistic approach to promoting Dubai as a preferred global hub for business, investment and tourism by positioning it as of one of best places in the world to work in and enjoy an unparalleled lifestyle. 

DET is targeting new opportunities to drive interest among such stakeholders and bring them to Dubai to explore the market. In order to do this effectively, we have identified stakeholders, such as HNW individuals, specialised talent, entrepreneurs, business leaders and investors within business communities in target markets who have an interest in Dubai and adopted tailored strategies to attract and retain them. 

This strategy sees DET working with key public and private sector stakeholders in Dubai and abroad, to align and amplify efforts with these stakeholders, familiarising them with the Emirate and the competitive advantages that it offers. A prime example of this is DET’s recent collaboration with Dubai World Trade Centre, Dubai Chamber of Digital Economy and other stakeholders to drive global interest and participation at GITEX Global 2022 and North Star Dubai 2022. We were encouraged to see our efforts materialise as the tech show attracted more than 170,000 attendees, 40 per cent of whom were international, while the event itself generated an estimated $707 million in total economic output.

DET is now looking at new ways to measure and analyse the economic impact of its attraction efforts, as that is what matters at the end of the day. Our approach goes far beyond promoting Dubai and attracting businesses to set up operations in the Emirate. It is designed to look at the full impact benefits that the Emirate can tap into as a global wealth hub by tracking the number of companies linked to the wealth management sector, as well as the number of jobs, skills and employees that they would bring to the market.

More than two years ago, the UAE and Israel signed the Abraham Accord and there has been a lot of fruitful capital/technology/human interaction. From a private banking/wealth management point of view, what examples can you cite of how this co-operation is working? What challenges still need to be overcome?
The volume of bilateral trade between Israel and the UAE is a good indicator of just how much bilateral business ties have developed and expanded since the signing of the Abraham Accord. A non-oil trade between UAE and Israel grew exponentially to hit $2 billion in the first nine months of 2022, up 114 per cent from the same period in 2021, the UAE Minister of Foreign Trade recently revealed. Meanwhile, the number of Israeli companies registered with Dubai Chambers has grown exponentially to reach 114 today. That number is expected to rise further in the near future, following the ratification of the Comprehensive Economic Partnership Agreement signed by the two countries and the recent opening of Dubai International Chamber’s office in Tel Aviv. 

Dubai will continue to play a central role in facilitating UAE-Israel business exchange, by laying the groundwork for bilateral business partnerships that drive sustainable economic growth.

Fintech is one of the key sectors where we have seen new bridges built between business communities in Israel and Dubai. In 2022, Israeli unicorn Rapyd became the first money services company from the country to open an office in Dubai. The Israeli tech company has been on a hiring drive over the last year, as it aims to leverage its presence in Dubai to lure international talent, a smart solution to the labour shortage that it is facing at home.

DET has seen a wave of new interest from other Israeli companies that are keen to explore the possibility of establishing a presence in the Emirate, while many leading businesses from the country have already leveraged major events such as Expo 2020 Dubai and GITEX Global in 2022 to expand their global profile and tap into market opportunities. DET is looking to capitalise on that growing interest by positioning Dubai as a magnet for unicorns and other promising companies from Israel that can shape the Emirate’s innovation ecosystem and leverage it as a gateway to expand their reach across the Middle East, Africa and Eurasia.

Financial and cyber security are other areas of mutual interest where businesses in Dubai and Israel are aligning their efforts. Less than two years after Dubai-based Emirates NBD signed an MoU with Israel’s Bank Hapoalim, enabling Israeli businesses to transact directly with their UAE counterparts; Israel technology firm ThetaRay secured a contract with Mashreq Bank, under which it will be granted a licence for its financial crime detection tool that monitors banking transactions. 

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes