Middle East

UAE's Ultra-Wealthy to Inject $500bn into Economy by 2026

The UAE is on the verge of receiving a massive financial boost as family offices and ultra-high-net-worth individuals (UHNWIs) gear up to pour $500 billion into the nation's economy within the next three years.

A recent study revealed that this substantial sum equates to a forecasted 46% growth in financial wealth, translating to a compounded annual growth rate of 6.7%.

A joint study by KPMG and Agreus highlights that a significant percentage of family office leaders in the UAE are keenly developing strategies to expand their wealth and prestige. Notably, almost half of all family offices in the UAE have a succession strategy, and an impressive 30% of UAE CEOs earn over half their basic pay in bonuses.

In a significant shift from prior practices, Middle Eastern family offices are entering 2023 with a more informed perspective. Previously, the emphasis was majorly on investments, sidelining the importance of a strong operational backbone. The UAE's welcoming regulatory framework has notably influenced family offices to establish their base in the country.

In a bid to foster family enterprises, the UAE government has recently initiated various programs and regulations tailored for family businesses. Among these, governance guidelines have been set up to guide these enterprises in instituting sound governance and ensuring seamless succession for ongoing business operations.

Tayyab Mohamed, co-founder of Agreus, emphasized the paramount role of family-owned enterprises in the region. Highlighting the prominence of the UAE and the Kingdom of Saudi Arabia in this domain, he remarked on the strategic move by the DIFC to establish the Global Family Business and Private Wealth Centre. This, he believes, positions the Middle East as a potential epicenter for family offices in the days ahead.

Furthermore, the report underscored that UHNW families are ushering in company-wide initiatives. This includes schemes promoting employee participation, like profit-sharing and employee ownership trusts, and the creation of structured compensation packages, all aimed at retaining and motivating staff.