Family offices and ultra high net-worth individuals (UHNWIs) are expected to contribute $500 billion to the UAE economy by 2026, a new report finds.
This figure accounts for an anticipated 46 percent increase in financial wealth within the next three years, representing a compounded annual growth rate of 6.7 percent.
The KPMG and Agreus report also found that family office leaders in the region are aggressively pursuing strategies ti grow their wealth and reputation. Around 47 percent of all family offices in the UAE were found to have a succession plan in place, while 30 percent of UAE CEOs are also able to earn more than 50 percent of their salary as an additional bonus.
“Middle East family offices are approaching 2023 with an educated outlook. Previously many family offices focused heavily on investments and less on having a robust sophisticated operational infrastructure, but this trend has changed,” said Raajeev B Batra, Partner and Head of Private Enterprise at KPMG Lower Gulf.
“The regulatory framework in the UAE more specifically has been a significant driver in attracting family offices to set up in the country.”
AE government supports family businesses
The UAE government recently rolled out several programmes, initiatives, and regulations designed to work in favour of family businesses. The country recently set out governance guidelines to assist these businesses in establishing effective governance and facilitate a smooth succession to ensure business continuity.
“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 [Kingdom of Saudi Arabia] rapidly rising within this space,” said Tayyab Mohamed, co-founder of Agreus.
“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 also found that UHNW families are introducing initiatives within their companies such as employees participation schemes including profit sharing and employee ownership trusts. Many have also devised professional compensation structures to retain staff and incentivise them.