Abu Dhabi's ADGM has seen a rise in asset and fund managers, with assets under management in the financial hub rising by 215 per cent annually in the third quarter of 2024.
The number of asset and fund managers operating within the jurisdiction reached 128, managing 156 funds by the end of the September quarter. Some of the new entrants during the last quarter include PGIM, a $1.33 trillion US asset manager; Elysium Management; Gemcorp Capital; Stonepeak, a US-based alternative investment company with $71.2 billion of assets under management; and Nuveen, which manages $1.2 trillion of assets.
This month, BlackRock, the world's biggest asset manager, also said it received a commercial licence to operate in Abu Dhabi, as the UAE capital emerges as a global hotspot for finance. New York-based BlackRock, which has nearly $11.5 trillion in assets under management, also plans to obtain regulatory authorisation to operate at ADGM, it said.
“The continued influx of businesses and investors into ADGM highlights Abu Dhabi’s competitive advantage in the global financial industry and the growth of the Falcon Economy,” said Ahmed Al Zaabi, chairman of ADGM.
Mr Al Zaabi attributed the growth to its “stable regulatory environment, strategic location and ease of doing business”, emphasising ADGM’s global appeal for institutional investors and businesses.
In the July-September period, newly issued business licences in ADGM increased by 33 per cent year-on-year to 759, spanning financial, non-financial and retail firms.
The continued influx of businesses and investors into ADGM highlights Abu Dhabi’s competitive advantage in the global financial industry
Ahmed Al Zaabi,
chairman of ADGM
The total number of operational entities within ADGM’s jurisdiction increased to 2,251, up 31 per cent on an annual basis, reflecting strong demand from sectors like asset management, financial technology and professional services.
Since the third quarter of last year, there has been an influx of 4,433 workers, marking an increase of 35 per cent in the overall workforce within the ADGM jurisdiction.
The financial centre’s growth aligns with Abu Dhabi’s broader economic diversification goals, with the emirate’s economy registering a 4.1 per cent annualised growth in the second quarter of this year.
Growth was driven by the emirate’s non-oil sector, which expanded by 6.6 per cent during the period, reaching a record Dh164.2 billion ($44.7 billion). The non-oil sector's share of the emirate's economy rose to more than 55.2 per cent, its highest since late 2014.
Abu Dhabi, which accounts for the bulk of the UAE's oil and gas production, is striving to diversify its economy away from hydrocarbons and expand its non-oil industrial base across sectors such as hospitality, real estate, infrastructure and technology.
This growth comes as ADGM continues its expansion to Al Reem Island, introduces regulatory enhancements, and prepares to host Abu Dhabi Finance Week next month, expected to attract more than 20,000 delegates.
In March, ADGM also announced an initiative to support the transition, exempting businesses operating within the non-financial and retail sectors on Al Reem Island from paying any fees to obtain an ADGM commercial licence until October 31. This date is now extended to December 31.
ADGM has also signed an initial agreement with the Department of Municipalities and Transport to enable the transfer of real estate services within centre’s expanded jurisdiction.
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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