World’s richest families are shifting investments to Gulf

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Qatar’s World Cup, Saudi’s Vision 2030 and UAE’s dynamism are all helping attract wealthy family investors to the region, says UBS

Investments in the Middle East by ultra-high-net-worth family offices will increase by at least 50 percent over the next decade, a senior executive at the Swiss global wealth manager UBS told AGBI.

Family offices, or privately held companies that handle investment management and wealth management for a family, seek to effectively grow and transfer wealth across generations.

The latest UBS Global Family Office Report 2022 surveyed 221 family offices around the world, which collectively oversee wealth of $493 billion and have average assets under management of $2.2 billion.

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The study found the Middle East accounts for just four percent of family offices’ global asset allocations due to a lack of opportunities, according to Josef Stadler, executive vice chairman of UBS Global Wealth Management, who manages some of the bank’s wealthiest clients.

“There are limited opportunities to invest locally and domestically simply because the liquidity in the domestic market is not there,” Stadler said.

“The amount of money chasing domestic asset opportunities exceeds the supply. So if you’re a big investor you naturally have to find alternative places to invest your money.”

Changing dynamic

With Qatar investing billions in the World Cup, Saudi Arabia unveiling a roll call of mega projects as part of its Vision 2030 to diversify its economy, and the UAE continuing to make it easier for foreign investors to enter the market, Stadler believes the Middle Eastern demand and supply dynamic is changing.

“I think that four percent [of global allocation] will go up and it’ll take about ten years to get there,” he predicted.

The US continues to be the dominant market with 44 percent of all global asset allocations for family offices, followed by Western Europe (30 percent). 

Among Middle East and African family offices, 37 percent of assets are in the US, followed by 26 percent locally in the Middle East.

The UBS report showed that China currently accounts for seven percent of Middle East and African asset allocations, but Stadler believes there are big opportunities, especially in the technology sector.

“China is growing: There are as many unicorns in China as there are in the US. That trend is unstoppable, and many Middle Eastern investors have invested in China and continue to do so,” Stadler said.

Expanding operations

As a result of the anticipated boost in business opportunities in the Middle East, the Swiss bank is expanding its operations in the region.

In February last year it was reported it had opened an office in Doha to handle asset and wealth management services, while in October it expanded its operation in Dubai, including a wealth desk to cover Kuwait and Oman.

“Our presence in Qatar was overdue, we think the region has massive importance,” said Stadler.

“Usually, I refer to Saudi Arabia as being in the eye of the storm – it’s quiet, but at the fringes, it’s windy. They are currently enjoying a remarkable position. 

“While the world is volatile and everybody’s concerned about geopolitics, I think the Middle East right now is in a sweet spot. I think our presence in Qatar and Dubai was timely.”

With Saudi Arabia developing a raft of projects, from theme parks at Qiddiya and high-tech robotics at Neom to Red Sea eco-tourism, Stadler believes the kingdom will be a haven of new opportunities going forward.

“Family offices see Saudi Arabia as an attractive place to invest. It’s growing, it’s opening up, it has massive potential,” he said.

“It has limited investment supply, so there are limited opportunities to park your money compared to other places, but if they do all the right things,  [Saudi Arabia] will be a highly, highly attractive place to be in as an investor.”

The top 10 richest families

1. The Waltons with $238 billion
2. The Mars family with $142 billion
3. The Kochs with $124 billion
4. The Hermès family with $112 billion
5. The Sauds with $100 billion
6. The Ambanis with $94 billion
7. The Wertheimers with $62 billion
8. The Johnsons with $61 billion
9. The Thomsons with $61 billion
10. The Boehringers and von Baumbachs with $59 billion