Ali Hassan explains why the DIFC is attracting family offices.
The Dubai International Financial Centre (DIFC) is the financial hub for the Middle East, Africa and South Asia, providing a world-class platform connecting these regions’ markets with the economies of Europe, Asia and the Americas.
Dubai is becoming a natural location for the growing south-south trade and capital flows. An onshore hub, DIFC provides a stable, mature and secure base for financial services.
Why Dubai and why a financial services hub? The DIFC represents a key strategic component of the long-term economic growth strategy of Dubai. Dubai has its history in commerce and trade, a similarity it shares with the great financial centres such as London and New York, because where there is trade there’s always the need for finance. Trade demands financial structures, investment, finance, management of assets and trading, while Dubai saw the development of a full service financial centre as a natural fit with its commercial heritage and aims. There was recognition that the wealth and economic growth of the region would in time naturally drive demand for proximity to financial services expertise, and Dubai with its unparalleled transportation hub was in a prime position to establish itself as that epicentre.
In 10 short years, the DIFC has established itself as the natural choice for financial services, becoming a nucleus for such activities alongside New York, London, Geneva, Hong Kong, Singapore and Tokyo. With 16,000 people, 450 regulated firms and more than 1,000 companies, the DIFC offers wealth managers and family offices an ideal base from which to service clients and investments.
The momentum continues
This year is set to be the strongest year of growth for the DIFC since 2009 in terms of the number of entities establishing and the number of individuals working within the Centre, while 2015 is on track to surpass even that performance. What key aspects
are attracting people to come?
Early on it was recognised that to be attractive, the Centre would need to adopt key aspects of infrastructure. To this end, the DIFC has been established as a Federal Financial Free Zone, within which the commercial and civil laws of the UAE have been disapplied, and in place a common law legal framework has been adopted with a set of Laws that represent international best practice, administered by a DIFC Court that operates to international standards of transparency and due process.
With respect of financial regulation, success demanded a financial regulator of international standing administering a financial regulatory regime in an efficient and transparent manner. Today the DIFC Court has a track record of judgments (which can be viewed on its website, www.difccourts.ae) and the regulator in the DIFC, the Dubai Financial Services Authority, has attained a high rating during an assessment by the IMF of its regulatory approach and regime. The DFSA has signed more than 80 memoranda of understanding covering equivalency and supervisory co-operation with other financial regulators around the world. This is a considerable achievement; to draft laws and regulations is one thing, to implement in line with international standards is quite another.
Finally, the DIFC provides a working environment of high-quality office buildings, dining facilities and retail outlets that can cater to the business and personal needs of the professionals that make up our community. Everyone based in the DIFC also benefits from the great infrastructure that is available in Dubai such as the airport, the metro or the roads. Commuting times to the DIFC are typically 15 minutes, arguably uniquely short for a global city.
Attractions for investors and investments
The Middle East, Africa and South Asia region is an increasingly important focus for asset managers and wealth advisers. A range of demographic, macro-economic and secular trends are increasing regional wealth while demand is growing for world-class regionally based services to manage this wealth on behalf of individuals and institutions.
Markets are increasing in depth with sophistication and private equity opportunities and other investments abound; recently both the UAE and Qatari markets were upgraded by Morgan Stanley Capital International to ‘emerging market’ status. The Middle East is home to nine of the top 20 sovereign wealth funds with assets totalling ome $2tn and private wealth in the Middle East stands at $5.2tn with a projected Compound Annual Growth Rate of 6.5% both of which combined provide pools of available capital for transactions, investment and other financial relationships to flourish.
For families, the DIFC offers the safeguards of a world-class regulatory and legal framework combined with favourable commercial aspects such as free flow of capital, 100% ownership, no employment restrictions and competitive taxation rates. The deep talent pool of the DIFC gives families access to financial professionals, lawyers, accountancy firms and a number of other service providers such as information companies, trust and company service providers. The legal framework enables the full range of family office activities allowing the establishment of fund vehicles and special purpose companies, trusts and other structures required in implementing wealth management solutions. For families from the region it offers unique proximity, allowing you to be close to those that are managing your money.
But no-one in Dubai is very far from anywhere else in the world. It’s standing as a transportation hub offers unparalleled connectivity to global destinations, providing easy access for business and personal needs. Dubai’s geographical location gives it a favourable time zone, as the working day in Dubai overlaps at least at some point with the trading day in Asia, Europe and North America.
From a lifestyle perspective, Dubai is recognised as a great place to live. Residents enjoy Dubai’s vibrant, cosmopolitan and open environment with cultural, leisure and sporting activities available akin to those found in other global cities. High-quality schools, hospitals and clinics which are well-regulated, providing international standards of care, service and learning. The international perspective is well catered for with English, German, French, Swedish and Russian speaking schools available amongst others.
The DIFC Authority works hard to support our clients both during the setup phase of their businesses and also once they have established. Your business success is our success and we offer our support through dedicated relationship management, maintaining the world-class infrastructure and offering networking opportunities within the