A recent survey conducted by KPMG and Agreus has revealed promising projections for the financial wealth of family-owned businesses and ultra-high-net-worth individuals (HNWIs) in the United Arab Emirates (UAE). The study, titled ‘2023 Global Family Office Compensation Benchmark,’ indicates that the UAE’s financial wealth is poised to grow at a compounded annual rate of 6.7%, with expectations of reaching a remarkable 46% increase by 2026.
The report highlights several factors contributing to this substantial growth, including the UAE’s favourable regulatory framework, tax advantages, strategic location, robust financial services sector, and the allure of high-quality lifestyle amenities. These elements collectively position the UAE as an ideal destination for establishing family offices, attracting substantial wealth to the region.
Intriguingly, the study also unveiled insights into the practices of family offices in the UAE. It noted that 47% of UAE-based family offices have established succession plans, underlining a commitment to long-term sustainability. Additionally, the report found that 69% of family office professionals have their salaries reviewed annually, while 30% of CEOs stand to earn more than half their salary as an additional bonus.
The financial wealth in the UAE experienced a notable 20% increase in 2021, with family offices and HNWIs contributing significantly, accounting for approximately 41% of this surge. Family-owned businesses were shown to play a pivotal role, contributing over 60% of the gross domestic product (GDP) in various regions of the UAE, according to the report’s findings.
Agreus Cofounder Tayyab Mohamed emphasized the significance of family-owned businesses in the UAE’s economy, stating, “The contribution of family-owned businesses in the region cannot be stressed enough. They continue to remain a crucial part of the economy, with the UAE and KSA rapidly rising within this space.” He further expressed optimism about the UAE’s potential to become a future hub for family offices, citing the DIFC’s recent initiative to establish the Global Family Business and Private Wealth Centre.
In another noteworthy development, Henley & Partners reported that the UAE is expected to welcome a staggering 4,500 new millionaires in the current year alone, highlighting the nation’s attractiveness for high-net-worth individuals.
To further support family businesses, the UAE has introduced a series of initiatives and regulations in 2023. These include Governance Guidelines and the launch of a family business advisory certification program in collaboration with the Family Firm Institute. The Dubai Media Office revealed that family businesses already generate over 40% of Dubai’s GDP. According to the UAE Ministry of Economy, a significant 90% of private companies based in the UAE are family-owned.
In the broader Middle East region, Forbes Middle East’s 2023 list of the Top 100 Arab Family Businesses reflects the prominence of such enterprises. More than 60% of these businesses are major shareholders in companies listed on regional stock exchanges. Saudi Arabia dominates the list with 33 entries, home to four of the top 10 companies, while the UAE follows closely with 29 entries, and Egypt and Qatar also feature prominently with 9 and 8 entries, respectively.