A number of billionaires, including Egypt’s richest man, are flocking to Abu Dhabi, setting up special-purpose vehicles there. But what’s driving them to the Emirate? Experts note the tax treaty, as well as mechanisms preventing foreign interference, are making it the preferred choice for the rich

Dozens of high net worth individuals have set up special purpose vehicles in Abu Dhabi’s international financial centre this year. AFP

What do cryptocurrency’s richest man Zhao Changpeng, hedge fund billionaire Ray Dalio and Russian steel magnate Vladimir Lisin have in common? They are among the many high-net-worth individuals (HNWIs) who have moved their assets to United Arab Emirates’ Abu Dhabi in recent times.

In fact, data compiled by M/HQ, a wealth advisory firm, has revealed that thousands of high-net-worth individuals are choosing Abu Dhabi to park their monetary assets, making the skyscraper-studded emirate the new top choice for billionaires.

But what makes Abu Dhabi the preferred billionaire haven? Why is Abu Dhabi more preferred than traditional havens such as the Cayman Islands, Switzerland and even the British Virgin Islands?

We get you the loaded answers.

Arrival of billionaires in Abu Dhabi

Recent data has revealed that a growing number of billionaires across the world are setting up special purpose vehicles (SPVs) in Abu Dhabi this year. M/HQ, the wealth advisory firm that is among the leaders in setting up SPVs, revealed that more than 5,000 of them exist now in the Abu Dhabi Global Market compared to the 46 in 2016.

For the unaware, SPVs are business entities, subsidiaries or holding companies created by a parent company. They are established with their own balance sheet to isolate financial risk.

Other financial observers have also noted this new development with many saying that Abu Dhabi is slowly becoming a haven for billionaires. Bhaskar Dasgupta, a former corporate adviser for the Abu Dhabi free zone, was quoted as saying, “We’re seeing more high-net-worth individuals moving from British Virgin Islands, Caymans, Mauritius and Singapore to here.”

Another study has also revealed that UAE has emerged as among the top five destinations for net inflows of HNWIs in 2023, along with Australia, Singapore, United States and Switzerland. A report published by Zawya stated that around 4,500 ‘Richie Rich’ have moved to the UAE. Prior to the COVID-19 pandemic, the UAE traditionally saw net inflows of around 1,000 HNWIs per year.

Nassef Sawiris, Egypt’s wealthiest man with a net worth of about $7.6 billion, has reportedly moved his family office to Abu Dhabi. File image/Reuters

As recently as 5 December, Nassef Sawiris, Egypt’s wealthiest man, with a net worth of about $7.6 billion, reportedly moved his family office to Abu Dhabi. Sawiris is among the richest in the world, investing in German sporting-goods maker Adidas as well as English soccer club Aston Villa.

Prior to Sawiris, Ray Dalio, the billionaire founder of Bridgewater Associates – the world’s largest hedge fund, also established a branch of his family office in Abu Dhabi. At the time, Dalio had said, “Abu Dhabi is also becoming a hub for many exciting developments in the region, including across the UAE and in Saudi Arabia. For these reasons, I am thrilled to make Abu Dhabi a home for the Dalio Family Office.”

Similarly, Russia’s Vladimir Lisin has also moved his assets to Abu Dhabi. The businessman, who’s worth about $23 billion, in June moved his stakes in Novolipetsk Steel PJSC and Freight One JSC from Cyprus to Abu Dhabi special purpose vehicles.

Why Abu Dhabi is a preferred choice

But what makes Abu Dhabi so popular among the HNWIs? There are a multitude of reasons that emirate is becoming a hot spot for the Richie Rich of the world.

Abu Dhabi’s tax rate is perhaps the driving force behind the rise in billionaires moving there. Experts state that the UAE operates double tax treaties with other countries, which can help the wealthy SPV owner minimise their tax bill for holdings within the SPV.

The emirate also has mechanisms in place to protect assets from foreign interference. Additionally, the UAE has also steered away from sanctioning countries like Russia owing to the Ukraine war, which makes it more attractive for the oligarchs and ultra-rich citizens of countries.

Another reason why Abu Dhabi is attractive to billionaires is the fact that other ‘safe havens’ have come under greater scrutiny in recent times. For instance, the Cayman Islands and British Virgin Islands are facing more inquiries about their tax structures, leading to a slide in new corporate registrations.

Abu Dhabi also offers long-term residency and even in some cases UAE passports, which makes it more attractive to HNWIs. In fact, Misha Glenny, an award-winning journalist and a former BBC Central Europe Correspondent was quoted as telling Business Standard, “UAE has long been a favorite destination of HNWIs from around the world. The reasons are obvious: zero taxation rates; highly developed infrastructure; low levels of street crime; a great deal of sun; affordable apartments aplenty; and increasingly cultural attractions such as the Louvre in Abu Dhabi and the Dubai International Book Festival that boasts some of the world’s top-selling authors. As a hub for the wealthy and business from all corners of the world, the opportunities to expand one’s professional activities are significant.”

A Bloomberg report also attributes the rise in HNWIs in Abu Dhabi to sovereign wealth funds, which control more than US$1 trillion in assets, and influential private investment firms.

It will be interesting to see what happens in the future, but for now it seems that Abu Dhabi is on a high. A money high!

With inputs from agencies