Dubai’s Appeal to Ultra-High-Net-Worth Indians and Family Offices

Dubai’s Rise as the Preferred Destination for Ultra-High-Net-Worth Indians and Their Family Offices

• In recent years, Dubai has emerged as the ultimate destination of choice for India’s high-net-worth individuals (HNWIs) who seek to establish family offices. This migration towards Dubai is underpinned by a multitude of compelling factors, including Dubai’s diverse investment landscape, strategic location, business-friendly ecosystem, robust infrastructure, tax advantages, and unwavering political stability.
• Furthermore, recent regulatory changes, notably the DIFC Family Arrangements Regulations of 2023, have solidified Dubai’s allure for affluent Indians eager to set up their family offices in the city.

Unpacking the Concept of Family Offices

• Before we delve into the reasons driving this burgeoning trend, let’s take a moment to understand what family offices entail. Family offices are specialized private wealth management entities tailored to the unique needs of UHNWIs and their families. These entities stand apart from traditional wealth management firms by providing comprehensive solutions to manage the financial and investment requirements of affluent individuals and families.
• Typically, family offices are entrusted with managing the wealth of families or individuals with investable assets ranging from $40 million to $120 million, with their primary mission being the seamless transfer of wealth across generations.

Why Are Wealthy Indians Establishing Family Offices Abroad?

• India is poised to boast over 10,000 plus UHNWIs with a cumulative wealth of $700-800 billion by 2024-25, with approximately 200+ Indian family offices currently in operation. The reasons behind the escalating trend of affluent Indians setting up offshore family offices are as follows:

1. 1. Access to a Diverse Investment Palette: Dubai offers a broader spectrum of investment products that are not readily accessible in the Indian financial markets. As India’s wealth continues to burgeon, the need for diversification has become paramount.
   2. The Quest for a Global Lifestyle: Wealthy Indians are aspiring to a better lifestyle, which encompasses access to premium restaurants, elite educational institutions, and global networking opportunities. Dubai, with its cosmopolitan allure, adeptly fulfills these aspirations.
   3. Embracing Global Citizenship: In the present-day globalized world, Indians are nurturing the desire to become global citizens. They are keen to broaden their horizons, expand their networking opportunities, and explore new realms of work and personal experiences.

Preferred Destinations: Dubai and Singapore

• While both Dubai and Singapore are the favored destinations for Indian family offices, Dubai holds a slight edge due to fewer personal restrictions and lower operational costs.
• Singapore, on the other hand, is renowned for its elevated governance standards and global recognition.
• Dubai and the UAE are actively competing with Singapore by elevating their governance standards to attract a greater influx of wealthy individuals and their family offices.

Dubai’s Emergence as a Hub for Family Offices

• Dubai and the UAE have witnessed a meteoric rise in family offices, with financial wealth experiencing a staggering growth rate of 20% in 2021, nearly doubling the global growth rate. Approximately 41% of this wealth was generated by UHNWIs and family offices, a share expected to ascend to 46% by 2026. Projections augur that the UAE’s financial wealth will continue to surge, reaching a staggering $1 trillion by 2026.
• Dubai’s strategic position as a bridge between the East and West solidifies its status as the premier hub for family businesses and investments. The recent enactment of the DIFC Family Arrangements Regulations of 2023 further cements Dubai’s standing as a prime destination for family offices, proffering a framework for global and regional family-owned businesses and private wealth management.

Impact on the Indian Startup Ecosystem

• The proliferation of Indian family offices in Dubai is exerting a significant influence on India-UAE bilateral trade, which has witnessed remarkable growth of approximately 16%, soaring to $84 billion in the financial year 2022-2023.
• Furthermore, family offices are increasingly channeling investments into the Indian startup ecosystem, providing startups with funding and invaluable strategic support. This shift augurs well for startups, as family offices bring to the table non-linear returns, risk diversification, and a staunch commitment to technology and innovation.
• In closing, Dubai’s metamorphosis into a haven for family offices is underpinned by its beguiling investment landscape, strategic geographical location, favorable regulatory framework, and unwavering political stability.
• As India’s affluent elite cast their sights on global opportunities and diversification, Dubai persists as the prime choice for the establishment of family offices, exerting its influence not only on the realm of wealth management but also on the burgeoning Indian startup ecosystem.

Disclaimer: The information provided in this blog post is for informational purposes only and should not be construed as financial or legal advice. It is paramount to consult with qualified professionals before making any significant financial decisions.