Family offices in the Middle East are growing at a rapid pace, as the wealthiest of families in the region demand formalized, corporate-likes structure to manage their growing assets.
Middle Eastern family offices are the byproduct of rapid economic transformation nearly 90 years running, along with an increasingly tech-savvy and sophisticated wealthy population who demand higher levels of service for their ever-growing assets.
To understand how these family offices came to being, what they’re looking for, and the environment they're in, let’s first look at the overall wealth landscape of the region.
Since the discovery of oil and gas on the Arabian Peninsula in the late 1930s, Saudi Arabia and neighboring countries in the Gulf region have witnessed meteoric rises in economic growth, as well as dramatic gains in personal wealth among their citizens.
While sales of energy resources are not the only means by which the region has developed, the discovery of “black gold” has nonetheless played an instrumental role in the overall development of the region, as oil revenues have been used to develop other sectors of economies in the Middle East.
Across the oil- and gas-producing regions, governments have recognized the importance of a versatile economy beyond oil, so they are investing more in technology, tourism, entertainment, financial services, and real estate.
Today, Saudi Arabia is home to over 350,000 millionaires (USD), the most of any Middle Eastern country. Kuwait, with a population of close to 5 million compared to Saudi Arabia’s 35 million, comes in second with 217,000. But another source says 15% of Kuwaitis are millionaires!
And cities like Dubai and Abu Dhabi, once sleepy fishing villages along the shores of the Persian Gulf, have transformed into modern and luxurious metropolises within just a few decades.
Such rags-to-riches stories hold true for the rest of the UAE and countries like Kuwait, Bahrain, and Qatar, which hosted the 2022 World Cup, and Saudi Arabia to host in 2034.
All having ambitious plans for development and diversification, areas like financial services come into focus.
With these kinds of numbers, it's no wonder family offices in the Middle East are growing, rising by 20% by 2030.
While Middle East wealth numbers are interesting in themselves, there is more to look at regarding these individuals and families:
The rapid rise of wealth in the Middle East has been accompanied by equally ambitious efforts from governments to attract and retain capital.
Dubai and the broader UAE, as well as Saudi Arabia have emerged as leading destinations for family offices in the region, thanks to business-friendly regulations, tax incentives, and strategic visions for economic diversification.
The UAE imposes no personal income tax, no capital gains tax, and no inheritance tax, making it highly appealing for wealth preservation.
Dubai’s Free Zones (e.g., DIFC, ADGM) offer additional benefits like 0% corporate tax for 50 years and full foreign ownership.
Saudi Arabia’s Special Economic Zones (SEZs) and Regional Headquarters (RHQ) Program provide corporate tax exemptions (often 0% for up to 20 years) and streamlined licensing for family offices.
The UAE’s Family Business Law allows multi-generational ownership structures, while Dubai’s virtual assets policies cater to digital asset investors.
Similarly, Saudi is taking steps to offer fast-track licensing, residency visas for staff, and access to sovereign wealth fund co-investment opportunities.
While conflict and uncertainty exist in certain areas, the Arab Gulf states in particular have been politically and economically stable, allowing for growth and investment opportunities.
The UAE’s neutrality and golden visa programs, which offer 10-year residency for investors, are ways foreigners can capitalize on said opportunities.
Additionally, Saudi Arabia’s Vision 2030 is driving $1 trillion+ in diversification projects (e.g., NEOM, Red Sea tourism), creating more lucrative local investment opportunities.
Dubai’s startup ecosystem, which is ranked #1 in the MENA for venture capital, aligns with younger generations’ interests in tech.
And Saudi’s giga-projects and entertainment hubs like and Qiddiya and Diriyah Gate attract family offices seeking alternative assets.
While some practice Judaism and Christianity, Islam is by far the largest and most influential in the region.
Focusing on the Muslim majority and the role Islam plays, practices vary by countries and individuals.
From lifestyle choices to financial decisions, from personal beliefs to interpretations of faith, Islam has a presence.
Consider a few of these Islamic finance principles:
Of course, there is a lot more to learn about Islamic finance.
When interacting with Muslim family offices and wealthy individuals, one should be aware of these factors.
Hadi Al-Alawi, Chairman & CEO of Al-Hayat Group, shared his views that reflect the role Islam plays:
“One of the five pillars of Islam, zakat, or charity, is a religious obligation for all Muslims who meet the necessary criteria of wealth. It is a mandatory charitable contribution, and our tradition is that 20% of what we earn must go to charity. Money can buy anything tangible, but it will not buy you credibility, honesty, love and loyalty; these you need to develop with the relationships you build, which can in turn bring you more wealth than the money you earn.”
In short, Middle East family offices will have moral (and in some cases legal) obligations to make good use of their wealth.
Family offices in the region have changed their investment approaches over time. Previously, it was a more preservation-driven mindset, but nowadays the focus is to diversify family holdings and grow wealth.
Further reflecting religious values, a Lombard Odier report found that demand for Islamic investment strategies in the Middle East is very high among younger investors, and almost as strong as it is for older generations.
In fact, 91% of younger investors already allocate to this asset class, and 88% plan to increase their allocations to sustainable assets.
Real estate has historically been a large part of a family office portfolio (and Middle East family office professionals have higher than average allocations to the sector), but private investments are making gains, as they offer potential for higher returns.
83% of family offices in the Middle East invest in private equity.
Technology investments are another growing area in popularity. The Lombard Odier report also found that 79% of younger Middle East investors believe there are significant opportunities in the digital and tech sectors.
Here are a few notable Middle East family offices investing in technology.
Just as demand for Islamic investment strategies is very high among younger investors, there is greater interest in sustainable investing.
According to the Lombard Odier report:
Additionally, an Ocorian study of Middle East family office professionals found that the next generation is taking a bigger role in investment strategy, with nearly one in five (20%) say they are becoming much more involved.
The Next Gen respondents in the Lombard Odier report show a strong sense of loyalty to the Middle East, as 89% hold their assets in the region.
The Lombard Odier report continues to provide valuable insight on Middle Eastern investors.
While 85% of young respondents share traditional Middle Eastern values based on religious or cultural principles, 31% say those traditional values are updated for the present day. 79% of older investors, however, say their values are "exclusively traditional."
What's more, younger investors place greater focus on improving their lifestyle and remaining wealthy compared to older investors over the age of 40 (45% vs 16%), who are more interested in their financial and reputational legacy.
Should these younger investors start their own family offices or inherit one as the successor, their values will influence how they invest.
Venture capital is another area family offices in the Middle East look at. Technology is one of the major sectors they invest in through VC.
According to a Campden Wealth and HSBC Global Private Banking report, 58% of MENA family groups are active in venture capital, favoring early-stage investments such as angel and seed funding (50%), as well as growth-stage opportunities (50%).
Paul Aver, a managing partner at Frontier Path, a VC consulting and investment advisory firm for Dubai's family offices, said that these FOs have been active in VC the last 5+ years.
He also had some interesting commentary about the younger generation and tech:
“About 3-5 years ago, it would be difficult to talk with families about technologies and innovation, but now it is a standard thing. The young generation is interested in technology and innovation. Some of them are maybe not so excited about the traditional business that their families were doing for many years. They want to do something new.
Part of the reason for the change is that profit margins in "traditional" industries like fashion, retail, automotive dealership, traditional F&B, or construction are dwindling, according to Aver.
While men hold the majority of representation and control, as is the case in family offices globally, women are making gains.
According to one report, 15% of family office staff are women, with 25% of leadership positions held by women.
As more women in the region make gains in higher education, as is the case in Saudi Arabia, they'll be more likely to take on leadership roles.
The views of Rasha Badawi, director at Barclays Wealth and Investment Management in the Middle East, can only indicate that more women will be active in the family office space:
“As traditional family roles change and more women hold prominent positions in international business, their growing global influence is going to be a major economic force over the next decade, redefining areas that have historically been focused on, and dominated by, men.”
A few years back, one survey found that only 24% of Middle East HNWIs have succession plans for wealth and family businesses.
Since then, more have recognized the necessity and have begun to develop such plans, adding more professionalism and sophistication to their operations and structure.
But in the process, nearly half of family offices in one study said having a robust succession plan in place is a “major challenge.”
Arnaud Leclercq, Partner Holding Prive and Head of New Markets at Lombard Odier, shared his views:
“After a period of considerable wealth accumulation since the 1970s, many older [HNWIs] are preparing to pass on their wealth and their business to the next generation.
Preparation is key. Effective estate planning and a robust succession framework for the family business that includes formal governing documents can ensure that private wealth and business ownership are transferred smoothly and without conflict.”
Indeed, family offices need to make succession planning a priority as older generations are soon to retire.
Additionally, more than two-thirds of respondents said having a succession that complies with Shariah principles mattered to them.
With so many moving pieces, it's hard to focus on everything all at once:
And despite the opportunities, the family office environment and infrastructure is relatively nascent compared to North American and Western European counterparts. There are regulatory complexities and local laws from country to country that require extra due diligence and a need for outside yet local experts.
Many countries require not only a physical office presence, but also staff physically onshore as well as data stored and remaining with their jurisdictions.
So, Mideast family offices need the right resources to ensure a smooth and seamless setup.
Consultants, both locally and globally (with local Middle East locations), can offer a wide range of family office consulting services.
Depending on their specialties and depth of experience, they can help develop plans and execute in the areas mentioned above.
Within our own Empaxis partnership networks, data platform and service providers — like Fencore, Cutter Associates, and Ievers, among others — SFOs and MFOs have some valuable resources needed.
Within single- and multi-family offices, especially in operations and technology, there are many internal inefficiencies.
Manual, time-consuming, and error-prone work (compiling data from disjointed systems, data entry, generating reports, etc.) dominates.
And depending how long the family office has been in operation, they could be dealing with outdated/legacy technology, which no longer effectively meets the current demands. The entities also need help with data migrations, upgrades, and implementing platforms, etc.
Leveraging AI tools, advanced automation, and cloud systems are paramount to an efficient and scalable middle- and back-office operation.
And family office outsourcing providers for the Middle East like Empaxis help in all those areas, alongside our aforementioned partners.
As it stands, despite their investments in AI, less than 15% of family offices are actually using AI for task automation, presentation building, or forecasting, according to a Citi Private Bank survey.
As most Middle Eastern family offices have high allocations in private equity and venture capital investing, they will need help processing all the investment statements as they come in.
Empaxis can automate all those processes. See how other clients benefited from such automation.
It's an exciting time for Middle Eastern family offices, as new opportunities continue to emerge.
But with these opportunities and so many moving pieces, there are challenges that families cannot do it all alone.
For those outside the region looking to set up there, they should be mindful of Middle East family values and priorities, shaped both by religious tradition and general circumstances of today's tech-driven and data-driven world.
Even local wealthy families have much to navigate through. Doing everything internally, within just a family or a few close business partners often times, is a lot to manage.
Pus, there may be limited time, expertise, or interest in some of the activities that have to be done, hence the need for third party specialists.
And with that, family offices should take comfort in the resources at their disposal ready to assist, including those at Empaxis.
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