Innovation

UAE on Track to be the World’s Top Wealth Magnet for the Third Year Running

The United Arab Emirates (UAE) is poised to maintain its status as the world's leading destination for wealthy individuals for the third consecutive year, according to the Henley Private Wealth Migration Report. The report highlights the UAE's continued allure for high-net-worth individuals (HNWIs) from around the globe, particularly as the United Kingdom (UK) faces a significant decline in its millionaire population.

Decline in the UK’s Millionaire Population

Simultaneously, the UK, which has historically been a significant source of expatriates for the UAE, is expected to see a 17% reduction in its millionaire population by 2028, as per Swiss bank UBS. This trend is anticipated to gain momentum following the landslide victory of the Labour Party in the UK's June elections. Many financiers believe the new government's policies will drive more millionaires to seek opportunities abroad.

High-Net-Worth Individuals Seeking Greener Pastures

High-net-worth individuals are increasingly opting to relocate to more favorable environments as rising costs and taxes make their home countries less attractive. Tax-free expat hubs like Dubai are becoming preferred destinations due to their appealing lifestyle and financial benefits. The recent election victory of the Labour Party in the UK is likely to accelerate this trend, as some financiers predict more stringent tax policies under the new government.

Push and Pull Factors Influencing Millionaire Migration

“There are push and pull factors for this trend of millionaires opting to relocate to Dubai,” explains Karim Jetha, a long-time regional investor who moved to the UAE from the UK during the pandemic. Push factors include the prospect of higher taxes under a new Labour government. For example, one of Labour’s campaign pledges was to levy VAT on private school tuition, which would increase the cost by 20%. Pull factors include Dubai’s perception of being extremely safe and visa reforms that encourage migration.

Record Inflow of Millionaires to the UAE

The Henley report forecasts that the UAE will see a record net inflow of 6,700 millionaires from around the world by the end of 2024. This figure is nearly double that of the second-ranked country on the list, the United States, which is expected to welcome a net inflow of 3,800 millionaires within the same period. “With its zero income tax, golden visas, luxury lifestyle, and strategic location, the UAE has entrenched itself as the world’s number one destination for migrating millionaires,” the report states. The UAE’s golden visa is a long-term residence visa that allows foreign residents to live, work, or study in the UAE.

Diverse Origins of Migrating Millionaires

While the millionaires migrating to the UAE most commonly come from India, the wider Middle East, Russia, and Africa, an increasing number of Brits and Europeans are also expected to move to the glitzy desert emirate. Development and reforms in the UAE’s “wealth management ecosystem” have been instrumental in attracting this demographic, according to Sunita Singh-Dalal, partner at Hourani Private Wealth & Family Offices in Dubai. “In less than five years, the UAE has introduced a robust regulatory framework that provides the wealthy with a range of innovative solutions to protect, preserve, and enhance their wealth,” she says.

Factors Attracting Wealthy Individuals to Dubai

Several factors contribute to Dubai's appeal for wealthy individuals. Modern infrastructure, a robust international school system, geographical connectivity, low crime rates, no income tax, a remote worker visa, and numerous investment incentives are among the key attractions. These elements collectively create a conducive environment for the wealthy to thrive and grow their fortunes.

Projected Decline in the UK’s Millionaire Population

In contrast, the UK is set to see its millionaire population drop from 3,061,553 in the previous year to 2,542,464 by 2028, according to the UBS Global Wealth Report. It is crucial to note that the UK’s large millionaire population—the third-highest in the world—includes many foreign residents from places like Russia, the Middle East, and elsewhere. However, with the UK government phasing out its “non-dom” status, which allowed wealthy and often foreign residents not to pay British taxes on overseas income, much of that population will be looking to drop their UK residencies.

Economic and Political Factors Driving the Trend

“The outflow already generated by the economic and political turmoil in Britain risks being accelerated by further unwelcome policy decisions,” comments Hannah White, director of the independent think tank the Institute for Government in London, in the Henley report. She points to the 40% duty already in effect on estates above a threshold of £325,000 ($417,755), as well as the ending of the UK’s non-dom tax regime starting in 2025.

Impact of Labour Government Policies

The current Labour government has also pledged to remove the exemption for a 20% VAT charge on Britain’s private school tuition fees. This change would significantly increase the cost of education for those sending their children to elite institutions. “Labour’s commitment to remove their exemption from 20% VAT is a further unwelcome development,” White adds. This policy shift is expected to drive even more wealthy individuals to consider relocating to more tax-friendly jurisdictions like the UAE.

Conclusion

The UAE's strategic initiatives, favorable tax policies, and high-quality lifestyle continue to make it an attractive destination for high-net-worth individuals worldwide. As the UK faces political and economic challenges that are driving its millionaire population to decline, Dubai is poised to benefit from this trend, solidifying its position as the top wealth magnet globally. The ongoing migration of millionaires to the UAE is a testament to the country's successful efforts in creating a hospitable environment for the affluent, ensuring sustained economic growth and development.