It's Dubai vs Abu Dhabi in race for supremacy in family office riches

By Devon Pendleton
 

In the lobby of the Four Seasons Abu Dhabi, steps away from the offices of billionaires Ray Dalio and Changpeng “CZ” Zhao, men in white thobes and tailored suits cluster in hushed conversation around low tables strewn with tiny cups of Arabic coffee.
Seats in the hotel’s lounge pit are limited, and for good reason: It’s become the region’s nerve center for the obscure world of private capital.
 

“Every Tom, Dick and Harry around the world is trying to come here,” said Ryan Lemand, co-founder and chief executive officer of Abu Dhabi-based Neovision Wealth Management. “It’s like the gold rush.”

Some 86 miles (138 kilometers) up the Persian Gulf coast in Dubai, the scene could hardly be more different.

Its marble hotel lobbies are frenetic, with crowds of conference attendees and selfie stick-wielding tourists mixing with suited types with slicked-back hair. For all its mansions and gold-leaf everything, Dubai has scant oil and small sovereign wealth funds, and it had to be bailed out by its richer neighbour during the financial crisis. It’s the capital of over-the-top ostentation — while Abu Dhabi, investors like to say, is the capital of capital.

“Where there’s money, there’s wannabes. And there are a lot of wannabes in Dubai,” said Tobias Prestel, a Dubai resident who runs Prestel & Partner, a family office network that hosts conferences globally.

That question — Abu Dhabi or Dubai? — is a common one among billionaires, fund managers, startup founders, trust attorneys and even fraudsters who are either in or seeking a slice of the insular world of family offices. The answer gives a clue to the origins and intentions of a varied and global group, united in their interest in significant wealth. Seventeen interviews in both cities in recent weeks give a glimpse into how private fortunes are embedded in the United Arab Emirates, possibly the most moneyed and ambitious economy in history.

Last year, the number of registered foundations — a vehicle commonly used by wealthy families — in Dubai rose by 53 per cent. In rival Abu Dhabi, with its $1.5 trillion in sovereign wealth funds, the number jumped by 35 per cent, according to wealth advisory firm M/HQ. The aim of both emirates is to create a concentrated ecosystem where rich families from all over the world can network, co-invest and find ways to make their vast fortunes even bigger. Achieving that, however, has been challenged by issues ranging from staffing to culture clashes. And then there’s the task of sorting fact — genuine wealth — from fiction. 

Two cities

As recent visitors like Dan Loeb and Nelson Peltz would suggest, the wealth in Abu Dhabi is very real and a powerful draw for investors from all over. It’s the headquarters of Royal Group, the $300 billion personal empire of UAE National Security Adviser Sheikh Tahnoon bin Zayed Al Nahyan, a member of the richest family in the world. That’s separate from the nearly $1 trillion Abu Dhabi Investment Authority, which he chairs, and Al Reem Investments, the family office of one of his wives. 

Its financial center, the Abu Dhabi Global Market, has capitalised on its reputation by offering a myriad of flexible and discreet structures for billionaires’ investment entities. Some are designed to minimise disclosure on public registries and feature “lighter compliance requirements,” according to the ADGM. 

The extra secrecy jibes with how the rich locals prefer to operate. 

“They’re incredibly private,” said Christina Wing, founder of Wingspan Legacy Partners, an adviser to family offices globally. “We don’t even know their names. We spoke to one, and not only did we have to do all the NDAs, we had to do it for over a year before we even knew the client’s name. In the US, that’s one day.”

In Dubai, the lure is less about heavyweight wealth and more about lifestyle — restaurants, nightclubs and golf — and a freewheeling but low-crime atmosphere that’s welcoming of (moneyed) newcomers. That makes it ideal for networking, with a millionaire population that’s grown 78 per cent over the last decade, according to migration consultancy Henley & Partners. 

Dubai’s reputation as a choice destination for wealthy families fleeing hostile regimes or wars has surged in recent years, exemplified by the Russian money that flooded in following the invasion of Ukraine. The UAE doesn’t publish breakdowns of emigres by nationality but Henley estimates that about 3,100 high-net-worth Russians have moved to the UAE since the war began (though the pace of new arrivals has slowed). 

Like Abu Dhabi, Dubai has recently made more formal efforts to court the rich, though generally the wealth it’s attracted is smaller-scale and more transient. Newcomers are likely to have bases in multiple jurisdictions and see Dubai as a place to wait out turmoil in their home countries. Multiple people compared the city’s atmosphere to that of an airport’s business class departures lounge. 

Last year its financial hub, the Dubai International Financial Centre, opened the DIFC Family Wealth Centre, a registry for family offices (minimum net assets: $50 million) that also offers advisory services, workshops, mentoring, dispute resolution and certification based on how “structured” their governance is. The DIFC, which says Dubai is home to families collectively worth more than $1 trillion, also promises to facilitate “high-level networking” among the 600-plus registered family groups. Families can opt for a private registry for what DIFC Authority CEO Arif Amiri calls “the highest levels of privacy and confidentiality.”

Officials in Dubai hope the family-office push will also be instructive for rich locals, according to longtime wealth advisers in the region. The stakes are high. Family businesses make up about 90 per cent of UAE companies, according to the country’s Ministry of Economy, and many have aging patriarchs and are facing their first succession. 

Bungled handovers can reverberate through the economy. When mall magnate Majid Al Futtaim — the billionaire who brought indoor skiing to Dubai — died in 2021 with his will unresolved, it sparked a messy generational transition with 10 owners, including seven children and three wives, having a claim. The spectacle rattled the country’s business families, who still allude to it in hushed tones. With $16.5 billion in assets, Al Futtaim’s property empire was so critical that Dubai’s ruler convened a special judicial committee to oversee the inheritance.   

Rich peers
 

Both ADGM and DIFC tout their hubs as low- to no-tax regimes operating under UK common law in a convenient time zone. That’s lured an increasingly diverse range of families from India and the broader Middle East but also Russia, east Asia, Africa, Europe and even the US.

The result is a moneyed melting pot more diverse even than London and Singapore, which is also trying to entice family offices. But breaking down boundaries between groups can be challenging. 

“The blessing of the region is also the curse,” Wing said. “There’s great diversity in where money came from but that means not a lot of cohesion or groups that trust each other.” 

While there are plenty of finance professionals versed in managing the technical aspects of major wealth, those skilled in the more nebulous requirements of running a family office — the person overseeing the trust attorneys and managing relations with the family, for example — are in shorter supply, say those familiar with the industry.  

What both cities have in their favor is ease. Registering a family office in Dubai involves a straightforward application, financial review and $22,430 in fees. In Abu Dhabi, entities can be owned by a single family member (versus a minimum of two in Dubai), with registration fees as low as $500. Setting up in Singapore, by contrast, typically involves multiple structures and comes with minimum amounts family offices need to invest and spend locally. 

UAE-based investors also like that the Emirates’ rulers wholly support pro-wealth policies. “How many places worldwide have stability, a climate supporting entrepreneurs and wealth owners, and aren’t moving the goal posts all the time?” said Prestel. “Talking politics isn’t just frowned upon, it’s forbidden. That’s helped.”

The UAE was in the top 20 countries for foreign direct investment in 2022, with almost $23 billion of inflows, according to United Nations data. That’s provided ample fodder for Dubai’s booming conference industry and spawned multiple family office networks that are defined as much by who’s not in them as who is. 

At the elite end is the Family Investment Circle, a group of families representing the wealthiest and most established billionaire clans in the region, including the Olayans of Saudi Arabia and the Al Ghurairs of the UAE. Founded by two prominent Emirati dynasties, membership is capped, with 99 families interacting primarily over WhatsApp. There are opportunities for tete-a-tetes with vetted groups, like recent speaker Golub Capital, a direct lender. 

“At the end of the day, these families go on word of mouth,” said Adam Ladjadj, who founded the Emirates Family Office Association after working as the chief investment officer at the private office of an Emirati royal. “A lot of these families aren’t chasing the big capital, they’re chasing the right partners. It’s not always pegged to a check size.” 

His group based in Abu Dhabi brokers meetups between locals and also helps introduce foreign families from places like Germany or Brazil who are curious to talk to Gulf families operating in similar industries. Membership is invitation-only and eligibility determined on a case-by-case basis.

‘Real somebodies’
 

Yet the discreet nature and vague definition of family offices makes it ripe terrain for malfeasance. Dubai has already battled a reputation for money laundering, exacerbated by its embrace of crypto and few-questions-asked approach to inbound investment. Earlier this year, the UAE was dropped from a financial-crime watchdog’s so-called grey list of countries deemed high-risk after tightening its regulatory controls.

One popular family office conference circuit run by an Australian named Anthony Ritossa was an outright sham. A 2022 investigation by Vanity Fair revealed Ritossa was essentially a conman who’d fabricated a grand dynastic backstory and a knighthood and was charging attendees thousands of dollars for introductions to purported ultra-wealthy investors. The scandal was embarrassing for the family office industry but several family principals and advisers said they don’t regret attending the conferences. 

“Ritossa played the game of, ‘Pay me and I’ll introduce you to big money,’” Prestel said. “He didn’t deliver but the demand is still there.”

That’s what motivated Obediah Ayton to create what he describes as one of the biggest family office events in Abu Dhabi. His third event took place late last month and he said close to 300 people attended from as far away as Hong Kong and the Netherlands, along with local private behemoths like Sheikh Tahnoon’s AI-focused investment firm G42. 

The 32-year-old was born and raised in the UK and attended college in the US. He got his start in the family office world through chance encounters while a golf course caddy, working first as an accountant for a New York real estate family then as an adviser to the CEO of embattled financier Lars Windhorst’s Tennor Holding. He moved to the UAE in 2018. 

The owner of what he calls “an aspirational family group,” Ayton has built a following as a kind of guru to those looking to tap Gulf families for investment, authoring LinkedIn posts like “Here are Six Ways to Build Authentic Relationships with UAE Family Offices.” 

He lives in Dubai, but he intentionally decided to name his event group after Abu Dhabi. “There’s a lot more momentum,” he said. “Abu Dhabi has the real somebodies.”