On Tuesday 16 July, Robert Moore, Jersey Finance’s Director – UK, hosted a breakfast roundtable at the offices of Coutts attended by a small group of invited London-based intermediaries. Focussed on private client financial services in Middle East, the event began with an update from Faizal Bhana, Director – Middle East, Africa and India, followed by an insightful roundtable discussion on trends and key themes in the region.
Regional Highlights
- In the United Arab Emirates (UAE), the influx of African and Indian families relocating to the region, despite the introduction of corporate tax and Pillar Two, indicates its attractiveness to expats.
- Advisers have seen an increase in family businesses and offices redomiciling and professionalising their structures to Jersey indicating a greater demand for expertise in the Middle East region.
- Hedge funds are growing in popularity in the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM), a significant change compared to five years ago. This trend is expected to continue, stemming from the vast amount of wealth in the region and the increased sophistication of the structures sought by advisers.
- Major economies such as China, Japan and Germany are establishing infrastructure projects in Saudi Arabia.
The Rise of Sovereign Wealth Funds
Sovereign wealth funds are facilitating regional diversification in the Middle East. In the first half of 2024, the region’s sovereign wealth funds represented 54% of all global sovereign wealth fund activity, underscoring significant growth and diversification opportunities.
In the Kingdom of Saudi Arabia, their Public Investment Fund (PIF) is the largest sovereign wealth fund in the Middle East and has increased its partnership with the private sector so it can invest in family enterprises. Significant opportunities exist for joint ventures in the Kingdom, specifically for investors who wish to assist with tapping into international markets as an initiative to diversify the economy.
Discovering New Opportunities
With the continued increase of high-net-worth individuals (HNWI) in the region, growth opportunities for investors and HNWIs financial advisers are set to rise, driving ongoing demand for family office, private wealth and corporate services solutions and expertise.
According to Henley & Partners’ 2024 report, 300 millionaires are expected to relocate to Saudi Arabia this year, due to its strategies to strengthen its attraction.
Adviser Insights: Trends Around the Table
Advisers are noticing a rise in intergenerational wealth transfers and recognising the importance of engaging the next generation, a trend that is expected to continue.
Due to this generational shift, UK-based advisers to Middle Eastern private clients and families have noticed a positive shift in relation to impact investing. Also, the growing popularity of fund structures among family offices.
The Jersey Private Fund was mentioned at the event as playing a significant part of Jersey’s offering to Middle East institutional and private investors. The JPF is often used by Middle Eastern clients to reinvest back into the region.
The Power of Connections
There is an understanding for advisers to be on-the-ground building relationships with private clients in the Middle East. Word-of-mouth is an important part of relationships built in the region, particularly for financial services providers in Jersey.
One attendee shared an anecdote about receiving opportunities from Saudi Arabia and the United Arab Emirates through their client’s recommendation, in part, due to the attendee’s regular travel to the region.
Conclusion
The Middle East’s private wealth sector is marked by significant growth fuelled by economic diversification and increase in HNWIs, presenting opportunities and advancements for both UK and Jersey-based advisers. The reputation of Jersey’s international finance centre in the region means that it remains an attractive destination for Middle Eastern clients wanting access to a pool of high-quality, experienced wealth management professionals who can offer a range of solutions and services.