Tax Benefits and Infrastructure Investments Set to Fuel UHNWI Surge in the UAE

he UAE continues to solidify its position as a global commercial hub. It has been attracting ultra-high-net-worth individuals (UHNWIs), largely due to its tax benefits, ongoing investments in infrastructure, and favorable regulations. According to experts, the country will witness a significant influx of UHNWIs relocating to the region. This trend is reshaping the wealth management sector and fueling new opportunities for businesses and service providers catering to the global elite population. Particularly, those seeking a Golden Visa in UAE often seek professional assistance from reputed establishments like the IMC Group.

The UAE Continues to Witness a Rise in the UHNWI Population

A report reveals that the global population of UHNWIs has surged, and the UAE has been leading the list of countries attracting this wealthy class. Currently, the country is home to more than 116,500 millionaires. It also houses 20 billionaires and 308 centi-millionaires. The strategic location of the country, along with its stable political and economic environment continues to attract investors from all over the world.

By 2024, around 128,000 millionaires are expected to migrate globally. In this context, too, the UAE remains a prime destination. This influx serves as a specimen of the favorable tax policies of the country, along with its regulatory framework. These factors have positioned the UAE as a preferred hub for UHNWIs looking for stability, wealth preservation, and business opportunities.

From Holiday Homes to Permanent Residency

In the past, UHNWIs considered the UAE as a destination for holidays, investing in holiday homes and secondary residences. However, the trend has now shifted, with many of these families establishing permanent bases in the country. This is evident from the growing number of UHNWIs purchasing local assets. These include both residential and commercial real estate.

The favourable regulatory environment in the country, along with strong legal frameworks provides them with the confidence to make long-term investments.

Thanks to local legislation, this crucial transition has been possible in recent decades. The country has witnessed several regulatory reforms in recent months to enhance the business environment. This projects the UAE as a favorable destination for wealthy families. Particularly, certain laws have been introduced to enhance asset ownership and ease tax burdens. With better inheritance laws, UHNWIs have consistently increased their investments in the region.

Infrastructure Investments to Support the Influx of UHNWIs

The UAE is heavily investing in infrastructure to accommodate the needs of the growing UHNWI population. From luxury real estate developments to world-class hotels and transportation networks, the country is rapidly expanding its offerings. As a part of major projects, as many as 26,000 new homes have been constructed in the country in 2023. By 2025, another 32,000 properties have been planned to cater to the high-end clientele.

The real estate market in the UAE has witnessed growth, particularly in locations like Jumeirah Bay Island, Palm Jumeirah, and Emirates Hills. There has been a record-breaking number of property transactions, evident from the high sales volumes. This clearly indicates a strong demand from the UHNWIs looking to invest in the luxury housing sector in the country.

Tax Benefits and Regulatory Reforms Driving the Interest of UHNWIs

The favorable tax regime in the UAE has been a critical factor in attracting UHNWIs. Some of the provisions they benefit from include the zero-income tax policy, no capital gains tax, and no inheritance tax. This makes it an ideal location for those looking to preserve their wealth across generations.

Some of the recent regulatory reforms in the financial hubs like the Dubai International Financial Centre (DIFC) have also enhanced the appeal of the UAE. New family office regulations have been introduced in the country, which allows UHNWIs to manage their wealth without stringent oversight. This provides them with greater flexibility and control over their assets.

The UHNWI Growth Trend is Likely to Continue

In the coming years, the UAE is poised to witness consistent growth in its UHNWI population. A 30% spike in this population is projected by 2028, which will have a lasting impact on the economy of the country. Sectors like real estate, finance, and luxury goods are likely to benefit the most from this growth trajectory.

As the UAE continues to adapt its regulatory environment and invest in infrastructure, the country is set to maintain its status as the leading destination for UHNWIs in the Middle East. With the popularity of family offices for wealth management, an increasing number of affluent families are turning to these service providers. The IMC Group is one of the leading partners for family office setup in the UAE. With proper infrastructure and support from experienced professionals for wealth management, the region is well-positioned to attract and retain the world’s wealthiest individuals.