While this realignment of global influence has been underway for a while, the nature of the shift has become more nuanced over time and the Middle East is emerging as a pivot point in the power play between the east and the west.

In recent years, globalisation and a unipolar world (dominated by a single superpower) has given way to a multipolar landscape in which several global powers are operating simultaneously. In this multipolar world, the three key regions of influence (the US, EU and China) are diverging on key themes and in terms of how they operate. The Middle East is increasingly assuming the role, not only, of a meeting point between the three regions, but also as a fourth pole in its own right, in what has been, until now, a three-polar landscape.

Private wealth is among the many industries where this new global dynamic is manifesting visibly. The wealth management industry has endured a challenging few years, characterised by falling assets under management across the world. The Middle East, however, has stood largely alone in bucking this global trend, generating more wealth in 2023 than in any other period in its recent history.

Middle East: Retaining Capital, Attracting Talent

Powered by accelerating GDP, wealth creation in the Middle East continues to outpace that of the rest of the world. However, the most interesting element of this dynamic is that the wealth being generated is staying firmly within the region. Where once, capital was exported to the likes of Europe, UK and the US, today, more private wealth professionals from the west are relocating their operations to the major cities of the Middle East as talent is flowing toward the money rather than the money leaving the region, as has historically been the case. Recruitment into the private wealth sector has soared across the region, as have the number of Shariah-compliant financial houses and products.

As 2024 unfolds, the Middle East is poised to reinforce its stance as an increasingly important hub for global wealth. Among the many factors driving this shift are changes in global trade dynamics. These changes are most notable with regards to China, the region’s largest trading partner, as well as India and Japan which remain principal buyers of Gulf crude.

As 2024 unfolds, the Middle East is poised to reinforce its stance as an increasingly important hub for global wealth. Among the many factors driving this shift are changes in global trade dynamics. These changes are most notable with regards to China, the region’s largest trading partner, as well as India and Japan which remain principal buyers of Gulf crude.

¹ Hubbis, 2023
Saudi Arabia and the UAE have enjoyed significant financial gains from surging energy prices since 2022, resulting in significant petrodollar windfalls. As a result, both countries hold some of the world's largest and most active sovereign investment funds and have taken on an opportunistic, flexible and transactional approach to how they deal with the rest of the world.

Setting the pace for the region’s burgeoning economic ambitions, the governments of Saudi Arabia and the UAE have recently introduced several pro-business policies aimed at making their respective economies more attractive to global corporates, investors and wealthy families. In an effort to encourage more foreign direct investment, the UAE has been robustly implementing far-reaching business and legal reforms that have included relaxing laws governing foreign investor participation in onshore private companies.

These initiatives appear to be paying off as the UAE attracted more foreign direct investment (FDI), than anywhere else in the region accounting for 32.4% of overall inflows in 2023. 2024 is likely to see this trend continue as more family offices and HNW/UHNW individuals from across the world set-up bases and invest into the country. Dubai, in particular, has benefited greatly from being increasingly seen as a seamless gateway into the high-growth markets of the east.

Along with Saudi Arabia, the UAE is aggressively diversifying its economy away from oil in search of longer-term growth and stability. In accordance with this ambition, the UAE is making technology and supercomputing an investment priority. The Abu Dhabi Investment Authority, the world’s third-largest sovereign wealth fund, has launched a centre dedicated to cutting-edge research in data science, artificial intelligence, machine learning and quantum computing.

Saudi Arabia’s efforts to diversify its economy have been equally robust. It recently unveiled its Vision 2030 plan outlining a programme of reforms aimed at supporting innovation across non-oil sectors, attracting foreign investment and creating opportunities for local and international firms. The nation’s government clearly recognises the importance of foreign investment to its economic diversification ambition. As a result of these policies, Saudi Arabia is fast rising up the ranks as an attractive destination for global investors.

As part of these overall ambitions, the country is also seeking to establish fresh trade links with key markets across the world, including the UK. Total trade in goods and services (exports and imports) between the UK and Saudi Arabia was £17.1 billion in the four quarters to the end of Q2 2023, an increase of 32.8% or £4.2 billion from the four quarters to the end of Q2 2022.

As it asserts its new-found economic and political confidence on the world stage, the Saudi Arabian government has sought to acquire stakes in iconic British brands including Selfridge’s department store and Aston Martin. Other private Saudi investors are increasingly investing in real estate across the UK.

Away from the UAE and Saudi Arabia, other countries in the region are visibly flexing their economic muscle. For example, the oil-rich nation of Qatar is reported to be investing £4bn to create a green energy research and development campus in the UK.

As the Middle Eastern economies embark on this important new chapter in their economic and political story, their nearest superpower and the East’s dominant economic force is closing the book on a decade of seemingly unstoppable growth.

The country’s over-invested real estate sector was the first domino to fall, and has since been followed by declining trade activity, falling consumer prices and soaring unemployment among its urban youth. In conjunction with its fast-ageing population, China’s unfavourable demographics bode poorly for its ability to regain its economic mojo in the near term.

In politics, relations with the US have reached their lowest point since the 1970s, prompting many western companies to begin insulating their operations in China. This move comes in response to escalating tensions over trade and geopolitics between Beijing and western nations.

Recent research by PWC into the Chinese wealth management market found that, despite China’s challenges, the country remains home to the world’s second largest population of USD millionaires. By 2026, wealthy Chinese individuals are expected to hold 20% of total global HNWI wealth. But on account of the closed nature of its economy, China remains a challenging market for wealth managers as the rules by which it operates are very different to those of other jurisdictions.

As China navigates its current economic, political, and demographic challenges, other countries in Asia are likely to pick up the baton and run. From a demographic perspective, India overtook China as the world’s most populous nation early in 2023. In the private wealth arena, Singapore is rapidly establishing itself as a leading regional hub for global wealth.

That said, in coming years, many experts suggest Singapore will increasingly dominate the region for private wealth services. The number of single-family offices that provide wealth ² Georgetown University, 2023 management has risen threefold in the last three years, largely on account of the influx of wealthy Chinese families who see Singapore as an attractive place to hold assets, due to the relative stability of its currency.

At present, 59% of family offices in Asia are located in Singapore as the nation’s government continues to introduce a favourable tax and regulatory framework to draw wealth from both within Asia and beyond. Family office servicing stands as a significant industry, with a high demand for professionals such as accountants, lawyers, bankers, estate and tax planners, as well as investment and operations experts. However, the nation’s current talent pool falls short of meeting the growing demand for wealth services.

Singapore’s importance for the sector is set to grow as wealthy investors increasingly prioritise global mobility, fuelling demand for second passports, visas, and citizenships. As the competition to attract wealthy investors heats up, Singapore benefits from its recent entry into the global top 10 for flight connections and business-class travel, demonstrating the city-state's growing global significance.

In terms of outbound capital, the UK continues to be the leading destination for wealth leaving Singapore as UK property remains among the most attractive in the world. There are clear indicators that many wealthy individuals from Asia still see the UK as a desirable destination for their capital.

The real estate market – arguably the UK’s biggest draw for global wealth – has slowed under the weight of high interest rates and inflation. These factors and more are likely to remain top of mind for both investors and wealthy individuals as the country moves towards a prospective general election in November. Despite these uncertainties, the UK will benefit from its leadership in key areas that remain attractive to wealthy investors globally. These include the strength of its ESG capabilities, digitisation, accommodative regulatory environment and strong position for growth in an increasingly competitive international market.

In a multipolar world, the UK maintains a pivotal economic role as a so-called middle power, anchored by London’s status as a global financial hub and crucial in shaping global capital flows and financial services. The UK has been actively pursuing new economic partnerships post-Brexit, seeking to diversify its trade relationships and maintain its position as a centre for

³ Knight Frank, 2023

⁴ Empaxis, 2023
⁵ CNN, 2023

innovation and technology. Additionally, its participation in multilateral institutions contribute to its multifaceted economic influence in the evolving geopolitical landscape.

UK FDI is in decline as indicated by government figures revealing a nearly 30% decrease in projects since the peak of 2016-17, coinciding with the country’s decision to leave the EU. While the UK remains an attractive destination for wealth and investment, France recently overtook the latter to attract the highest number of new FDI projects of any European country.

The economy is forecast to grow 1% in 2023 and 1.4% in 2024. This contrasts with Germany which is on track for its first two-year recession since the early 2000s after its economy contracted in 2023.

While, across much of the west, the number of dollar millionaires declined over the last two years, France has bucked the trend. With three million millionaires – 4.8% of the world’s total – France has more millionaires than anywhere except the US and China.

This stands in stark contrast to other developed nations such as the UK, Japan, and Germany, all of which experienced a decline in their respective populations of millionaires, according to the Swiss bank UBS. While economic challenges will persist across Europe in the coming year, the region’s economic liberalism, high standard of living and robust regulatory environment will help it to survive as a haven for global wealth over the near term. 

This positive outlook is supported by evidence that Europe’s private banking industry enjoyed one of its most successful years in 2023. The wider Wealth sector must now navigate a more uncertain path ahead as shifting client needs and macroeconomic challenges rise to the surface. 2024 will see the continued emergence and influence of next-generation voices among its client base, increased digitisation and growing regulatory focus on client protections, tax transparency and stability of the financial system.

These dynamics have also drawn many investors from across the globe to buy into US markets in search of stability and higher returns. According to a survey carried out by Goldman Sachs in 2023, family offices worldwide have 63% of their capital allocated to US markets. This contrasts with 21% in other developed markets. The survey also found that 26% of family offices expressed an intention to enhance their allocation to the US, and 27% planned to increase allocations to other developed markets over the year ahead.

Such sentiment has been a boon for the US markets over recent years, however, there are signs that these dynamics are shifting. More US-based HNW and UHNW individuals, who are already overweight the domestic market, are aggressively looking for opportunities overseas. Therefore, while the US remains the top destination for inward FDI, its key investment destinations – notably the UK, Germany and Japan – will likely be beneficiaries of the changing dynamics that lie ahead.

₁₂ FT.com, 2024
₁₃  IMF, 2022