In this article, we explore Dubai’s evolving status as a financial powerhouse, delve into US-UAE discussions surrounding artificial intelligence, and investigate why more expatriates are moving to a city with a 7,000-year history. Dubai has rapidly transformed into a major hub for the ultra-wealthy and the world’s largest corporations. A clear indicator of this growth can be seen in the hedge fund industry—Dubai now serves as home to nearly 48 hedge fund offices, each managing assets worth over $1 billion. This sector currently employs over 1,000 professionals.
Salmaan Jaffery, Chief Business Development Officer of the Dubai International Financial Centre (DIFC) Authority, shared with Bloomberg TV that they have “63 hedge fund clients, 44 of which have assets under management exceeding the $1 billion mark.” Jaffery noted the shift from earlier years, where the majority of employees in the region were in sales or relationship management roles. Today, a significant number of professionals are responsible for actively managing and deploying capital from Dubai.
The trend is likely to continue, as Capricorn Fund Managers, based in London, recently announced plans to launch a platform to assist hedge funds and investment firms in swiftly establishing operations in Dubai.
For decades, Dubai has served as the Middle East’s primary business and finance hub, offering global firms a base from which they can access the region’s vast wealth and lucrative international markets. The DIFC recently re-entered the top 20 financial centers globally, having dropped out the previous year.
The workforce within the DIFC has grown by two-thirds since 2019, reaching approximately 44,000 employees by mid-2024. Jaffery also highlighted the “unprecedented” quality of talent—such as bankers and senior asset and portfolio managers—that Dubai has attracted in recent years.
Competition in the Region
Dubai faces increasing competition from neighboring Abu Dhabi, which controls $1.5 trillion in sovereign wealth and 6% of global oil reserves. Abu Dhabi has introduced several initiatives to attract major financial players, while Saudi Arabia is also aggressively courting global firms to establish headquarters in Riyadh, with its $925 billion wealth fund as a significant incentive.
However, Dubai’s appeal lies in its strong private wealth sector. According to a September report by Henley & Partners, Dubai hosts 212 centimillionaires, ranking 15th globally and first in the Middle East. In a previous newsletter, it was noted that more than 6,700 millionaires are expected to relocate to the UAE this year, further driving growth in private banking.
Recent developments reinforce Dubai’s appeal. Nigerian billionaire Aliko Dangote is setting up a family office in the city, and Santander has launched a new branch in the DIFC, aiming to serve the rapidly growing community of high-net-worth and ultra-high-net-worth individuals in Dubai and the broader region.
“The city is home to the region’s highest concentration of wealth and continues to attract millionaires, centimillionaires, and billionaires,” Jaffery commented. He emphasized that combining this influx of wealth with the presence of top asset managers creates the most vibrant wealth ecosystem in the region.
A US Visit and UAE’s AI Ambitions
In the political arena, UAE President Sheikh Mohammed bin Zayed made his first official visit to Washington since taking office. A central goal of the visit was to discuss partnerships in artificial intelligence (AI) and technology. Anwar Gargash, the diplomatic advisor to the UAE President, noted, “This is our most important strategic alliance.” Gargash further stressed that the UAE possesses the financial resources needed to support AI and technology projects, which often require substantial funding.
Accompanying the president was Sheikh Tahnoon bin Zayed, Abu Dhabi’s deputy ruler, UAE national security advisor, and overseer of a $1.5 trillion portfolio, which includes G42, the leading AI company in the region. During the visit, Sheikh Tahnoon, along with US National Security Advisor Jake Sullivan, endorsed the “Common Principles for Cooperation on AI,” signaling a commitment from both nations to advance the development of safe, secure, and trustworthy AI technologies.
Abu Dhabi Royal Meets with Business Titans to Advance AI Initiatives
Sheikh Tahnoon bin Zayed, a prominent figure in the Abu Dhabi royal family, held discussions with key global business leaders during his visit to the United States. In a post on X (formerly Twitter), Sheikh Tahnoon emphasized the UAE’s commitment to becoming a leader in artificial intelligence (AI) by “investing in individuals, sectors, and partnerships.” He shared this after meeting with Jeff Bezos, founder of Amazon, where they discussed “opportunities for joint cooperation in the field of AI and advanced technology.”
The UAE has positioned itself as a testing ground and regional hub for AI technology, potentially offering support to OpenAI CEO Sam Altman’s plans to expand the scope of AI systems. Despite its ambitions, the UAE has had to address concerns in Washington regarding its ties with China. Earlier this year, Microsoft pledged a $1.5 billion investment in G42, an AI company based in Abu Dhabi. This followed an agreement with the U.S. government that ended the company’s collaborations with China. The two companies are now working together to establish centers in the UAE, focusing on developing industry standards and best practices for the responsible use of AI technology.
During the US visit, Sheikh Tahnoon also met with the world’s wealthiest individual, Elon Musk. “We discussed the latest developments in advanced technology and AI, and ways to enhance joint cooperation,” Sheikh Tahnoon shared on X. Musk, who co-founded OpenAI in 2015 and later established the AI startup xAI in 2023, has long been a significant figure in the AI and technology sectors, despite resigning from OpenAI’s board in 2018.
Key Developments in the Middle East
In other news from the region, Israel escalated its airstrikes in Beirut, marking the first bombing of Lebanon’s capital in almost a year amid ongoing tensions with Hezbollah. Meanwhile, foreign direct investment (FDI) into Saudi Arabia stagnated in the first half of 2024, casting doubts on Crown Prince Mohammed bin Salman’s ambitious economic plans. Despite this, Saudi Aramco raised $3 billion through a Sukuk bond sale, receiving over $22 billion in orders.
Abu Dhabi’s Mubadala, a major sovereign wealth fund, announced a partnership with Citigroup and Apollo Global to explore opportunities in the booming private credit market. The firms aim to collaborate on $25 billion worth of deals over the next five years. Additionally, PJT Partners is increasing its presence in Saudi Arabia after acquiring Dubai-based deNovo Partners, while Exxon Mobil revealed it paid $7.41 billion in taxes and royalties to the UAE in 2023, more than any other country.
The real estate market is also experiencing shifts. Abu Dhabi’s largest property developer announced plans to spend $408.4 million to upgrade hotels in response to the rising demand for luxury tourism. In addition, Abu Dhabi’s national airline is retrofitting its aging Boeing jets due to a shortage of new aircraft.
Dubai’s Stock Rally and New Crypto Regulations
Dubai’s stock market surged by 12% this quarter, reaching its highest point since 2014. However, analysts predict the rally will cool down in the coming months. Meanwhile, Dubai is tightening regulations on crypto investments by enforcing stricter marketing rules, including prominent disclaimers.
In Turkey, the government’s finance minister told investors in New York that a tight fiscal policy would play a crucial role in curbing inflation. Turkey’s budget deficit is expected to shrink as part of the government’s medium-term economic program.
Dubai’s Real Estate Faces Moderate Bubble Risk
According to the UBS Global Real Estate Bubble Index, Dubai’s real estate market is at “moderate” risk of a bubble. Home prices have surged by 40% since 2020, making Dubai the city with the highest risk score increase among those analyzed. However, factors such as rising household incomes, a large proportion of cash buyers, and rental yields between 6-7% have mitigated the overall bubble risk, keeping Dubai in the moderate category.
Sharjah’s Rising Real Estate Market
As Dubai’s housing costs continue to soar, many expats are seeking more affordable options in neighboring Sharjah. Sharjah has historically offered cheaper housing, though much of its stock has been older and lacking the luxury amenities found in Dubai. However, this is beginning to change. Arada Developments, a firm partly owned by a member of Sharjah’s ruling family and Saudi Prince Alwaleed bin Talal, is leading a $9.5 billion real estate project.
Following legal reforms in 2022 that made it easier for foreigners to buy property in Sharjah, there has been a significant increase in international buyers. Indian buyers now represent nearly 29% of home sales in Arada’s developments, a notable rise from 8.7% a few years ago. Buyers from Germany, Canada, and the UK, previously underrepresented in Sharjah’s real estate market, now account for 10% of property purchases.
The growing demand is boosting property prices in Sharjah’s 7,000-year-old city, and other developers are also capitalizing on the trend.
