Asian family offices bet big on Middle East’s growing digital assets, renewable energy and fintech landscape

Asian families are increasingly turning to the Middle East as a key hub for wealth management. ‍

With family office wealth in the Asia-Pacific region projected to double to $2 trillion by 2030, according to Deloitte, the Middle East offers a strategic opportunity for investors to diversify into sectors such as technology, infrastructure, and renewable energy. The UAE and Saudi Arabia are at the heart of this shift, cementing the region as a crucial corridor for wealth flows, driven by fintech advancements and expanding financial markets.

This trend, as explored in our previous analysis, is evident in the evolving strategies of Southeast Asian investors who, are eyeing the Middle East for diversification and growth opportunities. North Asian family offices are also aligning with this trend, drawn by the region’s growing financial ecosystem and emphasis on sustainability and ESG initiatives. The convergence of interests underscores the Middle East’s growing role in global wealth management strategies.

“While geography, infrastructure, and open architecture make the Middle East attractive, what’s attracting both Southeast Asian and North Asian family offices to the region are the region’s policy push to accelerate towards the next generation of economic diversification centered on 1) transforming financial markets, 2) advancing fintech and digital ecosystems, 3) expanding into non-oil sectors like renewable energy, infrastructure, and tourism, and 4) fostering greater regional integration.,” said Charlene Lin, Managing Director, Strategic Growth for North Asia and Southeast Asia from Lighthouse Canton.

“This strategic shift presents a fertile landscape for partnerships and growth for Asian family offices to expand in the Middle East,” she added.

Taking an example of China, to substantiate this move, a 2022 PwC survey of Chinese investors with a presence in the Middle East found that the region’s market-related factors were the most attractive drivers for investment. Among the top three countries with the most promising growth prospects, Saudi Arabia led with 78% of respondents choosing it as the most favorable, followed closely by the UAE at 74%. Other notable markets included Iraq, Egypt, Kuwait, and Qatar, each selected by over 20% of respondents.

INVESTMENT FOCUS‍

These families are increasingly directing their investments towards sectors that show strong growth potential in the Middle East, with Dubai serving as a strategic hub.‍

“We believe real estate will be a key area of interest, especially with Dubai’s market showing significant promise in both commercial and residential properties,” said Lin. ‍

The region’s booming real estate sector offers family offices opportunities for stable, long-term investments, particularly as they seek to diversify portfolios away from traditional markets in Asia.‍

The numbers tell the story. Dubai’s real estate market has emerged as a favoured investment option for family offices, particularly those from Europe, Asia, and the Middle East. According to Knight Frank’s 2023 Wealth Report, family offices and ultra-high-net-worth individuals (UHNWIs) are drawn to the city’s luxury residential market, which saw prices rise by over 44% in 2022.

Another area of focus is private equity, with increasing allocations towards fintech, artificial intelligence, and logistics.‍

In contrast to stuttering US and European markets, private equity deal activity in the Middle East and Northern Africa region grew considerably in 2023.‍

Deal value grew by 21.2% year-over-year to reach $15.7 billion, according to PitchBook’s H2 2023 MENA Private Capital Breakdown. Deal count ticked up slightly compared with 2022’s 144 to notch 146 transactions. While these numbers have slowed down in 2024, the outlook still remains strong.

“The Middle East’s ambition to establish itself as a tech hub has seen countries like Dubai develop a robust economy and culture supporting startups and digital infrastructure.” explained Lin.‍

Investments in technology-driven sectors, particularly fintech and AI, have also seen rising interest from family offices in recent years. ‍

The region is also actively moving to diversify their economies away from hydrocarbons. The UAE especially, has a strong commitment to sustainability and is investing heavily into infrastructure and clean energy projects. ‍

“Private capital can help play a substantial role in the UAE’s energy transition. We see this space gaining significant traction with family offices as it also aligns with the values of many investors to promote sustainability.,” added Lin.

The acceptability of digital assets in the UAE as a regulated business opens another frontier for family offices. In March this year, the DIFC announced the world’s first Digital Assets Law and amended several related existing legislations to keep pace with the rapid developments in international trade and financial markets arising from technological developments, and to provide legal certainty for investors in, and users of, Digital Assets. ‍

“Dubai’s strong regulatory framework for digital assets makes it possible for investors to explore tokenization and blockchain-related assets in a way that’s simply not possible in many other regions.” explained Lin.‍

By focusing on these sectors—real estate, technology, clean energy, and digital assets—Asian family offices are positioning themselves to tap into the future growth of the Middle East.

FROM NEUTRALITY TO OPPORTUNITY‍

Middle East, particularly the UAE, has also seen an upsurge in policy support for family offices as the region combines a favourable tax regime, free zone incentives, and advanced regulations tailored to family-owned enterprises.‍

For instance, in Dubai, free zones like the Dubai International Financial Centre (DIFC), Dubai Multi Commodities Centre (DMCC), and Abu Dhabi Global Market (ADGM) have designed bespoke regulations to encourage global businesses to set up operations. ‍

Stella Lau, Managing Director, Wealth Advisory from Lighthouse Canton mentioned, “Anti-trust legislation and other local policy incentives are making Dubai a highly appealing destination for businesses and investors alike.”‍

In April, the FATF removed the UAE from its grey list, after the country spent two years improving its financial regulatory framework.

Also Read: UAE is off FATF’s grey list: What that means for trade, investment‍

One pivotal move was the introduction of the DIFC Family Arrangements Regulations, streamlining operations for family offices by minimising regulatory burdens. These regulations allow family offices to function without mandatory registration as a "designated non-financial business or profession" with the Dubai Financial Services Authority (DFSA), thus simplifying compliance and cutting red tape.‍

Lau and Lin both noted, “We’ve had clients express interest in DIFC because it offers them both asset protection and room for business growth.”‍

Furthermore, the UAE rolled out the Family Business Law, aimed at sustaining and growing family-owned businesses across generations. This law introduces a legal framework that facilitates smoother transitions between family members, improves governance, and provides clear mechanisms for dispute resolution. Such regulations give family offices the assurance that their operations will remain stable over time, further attracting international clients.‍

Across the Middle East, other countries have also implemented supportive policies for family offices. Saudi Arabia, for instance, through its Vision 2030 initiative, has taken steps to diversify its economy, creating an attractive environment for private investment, including family offices. The establishment of King Abdullah Economic City (KAEC) and Neom has become a magnet for investors looking to tap into new economic sectors such as technology and green energy, making the region even more compelling.‍

What amplifies the region’s attractiveness is also its advantageous tax environment. Tax treaties and benefits for single-family offices and on personal income taxes means that family offices operating in the region can focus on preserving and growing wealth across generations. Combined with political stability, world-class infrastructure, and proximity to key emerging markets, the Middle East is fast becoming key hubs for family offices seeking long-term sustainability and growth.‍

"The region offers a unique combination of regulatory support, tax incentives, and growth potential that makes it increasingly difficult for family offices to overlook." adds Lau.‍

Also Read: Decoding the New Corporate Tax Landscape in the UAE

LIGHTHOUSE CANTON’S STRATEGIC ROLE WITH THIS BACKDROP‍

The economic landscape between Asia and the Middle East has seen it transform into a modern-day Silk Road. The dynamic exchanges between these two regions and economic connectivity is driving substantial growth in trade and investment flows. According to HSBC, two-way investment led by North Asian and South Asian bilateral trade corridors could surge to USD36 billion annually by 2035.‍

Against this backdrop, and as interest in the Middle East rises, there is an increased emphasis from families and businesses to find established service providers who can help them set up their offices while ensuring their diverse and evolving needs are met, not just locally but globally too ‍

Lighthouse Canton has strategically positioned itself as a facilitator of this burgeoning trade and industry development, its global experience and local expertise allows it to align capital with opportunities, fostering sustainable and profitable relationships that benefit both Asia and the Middle East.‍

“Clients used to come to us primarily for investments. But as these families and businesses have become increasingly global, we’re seeing more demand from clients to guide them through their entire financial journey. This includes designing family governance frameworks, establishing cross-border footprints, creating investment strategies, offering bookkeeping and accounting services, cross-border advisory, estate planning, consolidated reporting, and risk management”, shared Lin‍

“Our role extends beyond traditional financial services. Whether clients need help with their investment portfolios or business operations, we are deeply engaged in these markets to create sustainable and profitable connections between Asia and the Middle East,” added Lau.