Asset base of family offices to surge in the Middle East

03 October 2023 2 min. read

The size and impact of the family office sector is rising rapidly in the Middle East. According to a study by KPMG and Agreus, financial wealth under management by family offices (and their rich family members) will increase by nearly 50% in the years up to 2026.

A family office is a privately held company that handles investment management and wealth management for a wealthy family, with the goal being to effectively grow and transfer wealth across generations. Family offices operate similar to private equity funds, with the difference that ownership and control lies in the hands of family members.

Exploring trends and developments among family offices, the globally-oriented KPMG and Agreus report found that offices in the Middle East have four main objectives: managing and offsetting financial risks, cross-generational wealth preservation, the administration of total wealth under one mantle, and a means to support philanthropic causes.

Purpose of the Family Office - Generations of wealth being managed

Over two thirds of family offices in the region are based in the UAE, with Dubai the most popular hub.

Commenting on the UAE’s attractiveness for family offices, Raajeev Batra, Partner at KPMG in the Lower Gulf, said: “The regulatory framework in the UAE has been a significant driver in attracting family offices to set up in the country.”

“In recent months alone, the UAE has rolled out numerous programmes, initiatives, and regulations, all designed to support the evolution and growth of the family business and their family offices. A new set of governance guidelines issued by the UAE aims to assist family businesses in establishing effective governance and facilitate a smooth succession, ensuring business continuity.”

Notably, one third of family offices have an international mandate. Of those operating with an international hub, over half have a presence in Europe, and one third in Asia Pacific.

Meanwhile, vice versa, a growing number of international family offices are setting up shop in the Middle East. Like outbound, the UAE is also the most popular inbound place for setting up.

Locations - AUM

Batra: “Wealthy families from around the world have recognised the UAE’s appeal as a destination for their offices stemming from its combination of tax advantages, strategic location, robust financial services sector, and high-quality lifestyle amenities.”

Tayyab Mohamed, Co-Founder of Agreus, added: “With the recent initiative by the DIFC to create the Global Family Business and Private Wealth Centre, we believe the Middle East is very competitively placed to be a hub for family offices in the future.”

The report further found that nearly half of all family offices in the Middle East have a succession plan in place. They also are upping their compensation & benefits to ensure their staff stay longer within their ranks, including through schemes like profit sharing and more lucrative bonus packages.