Quality of life and investment landscape draw wealthy expats to Dubai

The emirate is fast becoming a regional convergence point for global banks, while increasing tax burdens elsewhere are making the UAE even more attractive to high net worth individuals and their families.

Wealth managers are strengthening their presence in Dubai, to accommodate a surge in Western expats arriving in the Gulf emirate.

A recent study from Lombard Odier, a Swiss private bank managing $208bn in assets, underscores the UAE’s significant appeal to Western expatriates. More than 40 per cent cited high quality of life and investment opportunities as key motivators for relocating to the region.

Younger high net worth individuals are particularly drawn to Dubai for business reasons, with 29 per cent attracted by the “robust” regulatory and legal framework.

Lombard Odier says it is banking on the influx of globally mobile wealthy individuals to the region. “We have a long-standing relationship with the Middle East,” says Amer Malik, the Swiss bank’s head of Middle East International. “What we are able to do now is give people proximity to their bankers, and also build up an investment advisory team over here.”

Other major players, including Citi and Northern Trust, talk about global families increasingly having an outpost in the Middle East, typically based in Abu Dhabi or Dubai.

Dubai is fast becoming a regional “convergence point” for global banks such as Lombard Odier, which has 26 offices in 19 locations. “We have a substantial presence here, we can bring subject matter experts from different parts of the world to meet with our clients here in the region,” says Mr Malik.

The study also shows more than half (53 per cent) of the bank’s Gulf clients showing a preference for private banks for their estate planning needs. This figure increases to 65 per cent among those in higher wealth brackets and aged 51 plus.

“In the dynamic wealth management landscape of the UAE, the growing HNW expatriate community is increasingly seeking sophisticated and trusted advisers to help strengthen their knowledge across a range of issues, from wealth preservation and international wealth transfer to the taxation and regulatory implications of relocation to the UAE,” says Mr Malik.

Sustainability drive

There is also a growing interest within the expat community in environmental, social and governance (ESG) investments. Last year, the Swiss bank partnered with Systemiq, a system designer, to create holistiQ Investment Partners, a management platform focused on sustainable investments.

“The biggest push in sustainability is going to come from the younger generation. They are a lot more conscious, and they want to give back to the world,” says Mr Malik, who sees sustainability investment as a “long-term trend” and says Lombard Odier is investing heavily in sustainable finance and research.

This trend is also noticed by global player HSBC, which chose Dubai to hold one of its ‘Next Gen boot camps’ in January, focusing primarily on family governance, providing a relaxed forum for younger family members to meet and swap experiences and ideas. Both HSBC and DBS report increasing links between Asia and the Middle East, with clients often having business and investment links in both regions. DBS management from Singapore report spending more time with clients in Dubai during the last two years.

Tempting tax regime

“The ever-increasing tax burden in the developed world make Dubai and the UAE more and more attractive for high net worth individuals and their families,” says Kim Cornwall, a veteran private banker who now runs an educational consultancy firm for wealth managers.

“Combine this with excellent schools where no VAT is charged on fees – this compares very favourably to the UK, where an incoming Labour administration has pledged to introduce 20 per cent VAT on school fees,” he adds.

But there are also challenges to living in Dubai, according to Mr Cornwall. “One of the downsides to Dubai’s success is that it has become a very expensive place to live. Counterbalancing the high cost of living is the quality of life and low tax burden.”