Europe’s family offices find new home in the Gulf

Europe’s ultra-high-net-worth families are relocating to the Gulf in growing numbers, drawn by political stability, clear regulation and low taxes, according to wealth management experts.

Their family offices are following, but infrastructure is still maturing, exposing a gap between the surge in European wealth and governance frameworks in the Gulf.

The current structure often blurs the line between operating businesses and family capital, said the head of a family office that relocated with several of its clients. 

“Entrepreneurs like stability. Unfortunately that has not been there [in the UK] for a number of years now. Consecutive governments have created that sense of instability,” Vikash Gupta, co-founder and CEO of VAR Capital, told AGBI during the Family Office Summit in Dubai this month.

VAR Capital has more than $2 billion in assets under management across Europe, the US, Asia and the Middle East, and expects the majority of its growth to come from the Gulf. 

Gupta started out managing a single family office of British entrepreneur and millionaire Sukhpal Singh Ahluwalia. 

Gupta created VAR Capital after he took on more clients and has now expanded to manage the assets of 40 family businesses.

“The UAE provides a strong foundation, clear set of rules and an attractive tax base,” he said. “The ability to be able to plan your affairs and have faith in your system is also what’s driving a lot of people into the UAE.”

Driving forces

According to a new report, financial advisory company DeVere Group found that 35 percent of high-net-worth individuals they surveyed from the UK, parts of Europe, Australia and some Asian and African jurisdictions, are moving to lower-tax countries.

DeVere’s survey highlights three main drivers behind the shift to the Gulf: rising jurisdictional risk, defensive relocation for asset protection and the clustering of capital around policy predictability rather than purely growth prospects.

Another driving force, according to a new report by DIFC, is the $124 trillion intergenerational wealth transfer expected to take place by 2048. As younger heirs assume greater influence, investment strategies are evolving towards private markets, artificial intelligence, sustainability and impact, alongside traditional return objectives.

Arif Amiri, chief executive officer of DIFC Authority, said: “The global wealth landscape is undergoing a structural shift. In an environment of volatility, regulatory divergence and generational change, families are thinking about risk, resilience and long-term growth.

“Increasingly, geographical allocation is becoming as important as how wealth is invested.”

Growth potential

Gupta identifies hospitality, real estate, financial services and private credit as areas with strong growth potential in the Gulf.

He also sees private credit as a nascent investment opportunity for family businesses.

“Private credit is mature in Europe and the US. There’s not a big private credit offering in the [Gulf] region. As businesses begin to expand, private credit becomes a good tool to raise capital,” he said.

Yet challenges remain. Gulf markets are heavily relationship-driven, with less emphasis on formal corporate governance structures to which many European families are accustomed. 

The separation of operating businesses from family wealth – a cornerstone of institutional family office practice – is still emerging locally.

Further reading:

• The $1trn value of ‘boring’ assets for family offices
• Gulf family offices brace for a new era of oversight
• Gulf heirs build ‘legacy brands’ in era of transparency

Multi-family offices, which manage wealth for several ultra-high-net-worth families, remain a relatively small segment of the market in the GCC. 

Many family businesses in the region continue to rely on global private banks or in-house structures to manage their wealth as smaller institutions and single family offices are not equipped to provide the depth of financial expertise as a business grows, Gupta said.

He believes that multiple-family offices could be a useful supplement to an existing single family office as the business diversifies and expands. “The smaller players are not at scale or the level of maturity,” he said.

“[Multiple-family offices] can bring longevity, stability, alignment of interests, transparency and savings in cost as well.”