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Strong advanced economies have netted millionaires due to high inflation and uncertain economic conditions.It leads to higher investment interest in GCC countries, especially the UAE
In the UAE, ultra-high net worth individuals (UHNWIs) with a net wealth of US$30 million own about 41% of their wealth, which is likely to increase by 43% by 2026. — file photo
The UAE has become a magnet for the influx of high net worth individuals (HNWIs), with around 4,000 millionaires expected to relocate this year. Forecasts show that the UAE’s financial wealth will reach $1 trillion by 2022, with an annual growth rate of 6.7%.
Strong advanced economies have netted millionaires due to high inflation and uncertain economic conditions. It has led to higher investment interest in GCC countries, especially the UAE.
The UK, once known as the world’s financial centre, has seen a steady flow of millionaires, with 1,500 HNWIs expected to leave in 2022, with the UAE appearing to be the main beneficiary.
Furthermore, in the UAE, ultra-high net worth individuals (UHNWIs) with a net wealth of US$30 million own about 41% of their wealth, which is likely to increase by 43% by 2026.
UAE gains traction
Over the past few decades, the UAE has focused on tourism and trade, and adopted new immigration regulations in a flexible manner. Investors relocate, intending to explore business possibilities and available residency options. The UAE has attracted global attention for its efficient leadership during the pandemic and represents the benefits of a competitive tax rate.
Economic and social development is increasingly attractive to HNWIs looking to invest in real estate and industrial sectors.
Emerging business opportunities
The global community of high net worth individuals has chosen the UAE as their place of residence due to the latest economic and business incentives introduced to promote foreign direct investment (FDI).
With Expo 2020, high-tech and sustainable investment have reached a high point internationally. However, the Ministry of Economy has launched initiatives to attract the world’s top entrepreneurs and investors, offering a quick business setup process through flexible commercial and residential leases. A competitive and progressive approach attracts capital, digital asset entrepreneurs, exceptional talent, private wealth and foreign investment.
Recent forecasts show that stocks and investment funds are expected to grow at an annual rate of 8.8% through 2026. Compared to famous cities like London, the UAE is the only country that caters to the high-end luxury lifestyle of HNWIs, Tokyo and New York.
Economic Incentives in the UAE
The UAE offers a more attractive ecosystem for start-ups, entrepreneurs and self-employed, providing a business-friendly environment that offers great possibilities for high net worth individuals to emigrate and invest in the country.
With more than 40 free economic zones, investors have the flexibility to participate in more than 2,000 licensed business activities under full ownership of the company.
Top investment free zone
1. Dubai International Financial Centre (DIFC)
DIFC is a global financial hub for the Middle East, Africa and South Asia (MEASA) with leading international banks, law firms, insurance companies and GCC fintech companies. It is an integrated financial ecosystem with more than 2,700 companies connecting the fast-growing economies of Asia, Europe and the Americas.
With a unique legislative system and independent regulators, DIFC is one of the ideal bases for conducting financial, non-financial or retail business.
2. Dubai World Trade Centre (DWTC)
Under the jurisdiction of the DWTC, entrepreneurs can establish Free Zone Companies (FZCOs), Free Zone Establishments (FZEs) and UAE-Foreign Branches. It also offers licensing for commercial, general trade, professional, event management, single/multi-family offices, and even e-commerce businesses.
3. Dubai Multi Commodities Centre (DMCC)
Known for its commodities trading, DMCC is the global trading hub for more than 21,000 businesses from all walks of life. Free zones offer limitless opportunities to build and build businesses by trading with world-class commercial, residential and financial services.
Dubai, commonly known as the City of Gold, is where investors tend to build precious metals businesses as 25% of the world’s gold transactions take place within the DMCC. The Free Zone provides infrastructure for the entire gold value chain, from research to trading, through initiatives such as DMCC Tradefow, the Dubai Gold and Commodities Exchange (DGCX) and DMCC Vault.
Also named “Global Free Zone of the Year”, DMCC is the ideal free zone for start-ups/SMEs or expanding existing businesses with access to unparalleled infrastructure, networking, flexible solutions and quality living in a vibrant community Way.
The country’s business opportunities have been enhanced by a broadly integrated economy driven by technology and highly advanced infrastructure. Dubai recently topped the list of “FDI Global Cities of the Future 2021-2022”, a testament to its vision of creating a sustainable and vibrant ecosystem for high net worth individuals.
Although the sectors with the most developed investment opportunities include oil, gas, finance, gold and tourism, Dubai recently ranked fourth for prime residential capital value growth, which has always been a high-yielding real estate market. The growing demand for luxury properties will continue to trend upward, promising a higher return on investment (ROI). Residential property costs in Dubai will increase by 5.3% in 2022 as HNWIs and investors around the world buy more properties.
The UAE also offers investment opportunities in emerging industries such as cryptocurrencies, agtech and Metaverse. In addition, the government offers significant entrepreneurial incentives, making the country a gateway for HNWI investors.
UAE becomes business hub
The UAE can be a hub of operations to access a large number of markets around the world. Unparalleled opportunities, government initiatives and a flexible economy have prompted investors to make it a second home.
Based on interviews with wealth and fund managers, it is clear that millionaires invest capital as assets and businesses, followed by stocks and real estate.
Although the oil and gas market in the UAE is very prominent, there are also some potential industries to consider if you are looking for business investment opportunities. Some of the popular industries in financial markets include insurance and trading. As the need for technological adaptation continues to grow, IT companies offering application development, virtual reality (VR), artificial intelligence (AI) and digital marketing can easily capture the market.
The UAE is attracting high net worth individuals to expand their entrepreneurial plans in the tourism and hospitality industry by setting up high-end boutiques, resorts and hotels in multi-purpose tourism destinations.
Visa reforms popular
The UAE has introduced new visa policies and residence permits to attract high-end businesses and investments, making the country an ideal destination for innovation investment.
The golden visa was introduced in 2019 to encourage overseas investors and wealthy individuals to settle in the country. It offers a 10-year long-term residency program with automatic renewal. The green visa allows individuals to obtain a 5-year residence permit for themselves and their family members without a sponsor. Entrepreneurs can also apply for a business visa by investing in or starting a business in any of the emirates.
With its quality of life, healthcare system, stable economy and luxurious lifestyle, Dubai attracts net worth retirees and expats to invest and retire with the Retirement Visa, which provides 5-year renewable residency for their spouses and dependents visa.
Reciprocal visa changes dominate the exclusive benefits given to HNWIs to invest and settle.
In addition, several banks in the UAE are offering a 10-year golden visa for a period of 3 years based on fixed bank deposits of at least AED 2 million.
The UAE’s agile approach facilitates investment immigration as high net worth individuals continue to explore investment and business opportunities in search of expansion, travel mobility, living standards and wealth persistence, and legal protection.
Pratik Rawal is the managing partner of Ascent Partners. The views expressed are his own and do not reflect the policy of the newspaper.
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