As the UAE starts its Year of Tolerance, there is a renewed drive to attract individual high net worth investors with a whole new series of five-to-10 year residency visas for those looking to invest or retire here.
In an era when intolerance rules globally, with Donald Trump, Brexit and undocumented migration, an influx of HNW investors could not come at a better time for the Emirates, whose economy has suffered from lower oil prices in recent years.
It’s a growing trend. According to New Worth Wealth, some 5,000 new HNWs became resident in the UAE in 2017, more than moved to traditional safe havens like Switzerland and Singapore. About the same number of HNWs left the UK. The 2018 figures will likely be higher.
Last weekend Britain's richest man, Gopichand Hinduja, told a UK newspaper that many of the country’s wealthiest people have already "quietly left Britain for Dubai, Singapore and other financial centres".
Could this account for a surge in Dubai property deals at the end of last year? Or the 2.5 per cent jump in the Dubai Financial Market on the last day of 2018? Maybe. But there are reasons why many more new HNW residents will come.
The Muslim minority in the UK is increasingly worried about a backlash that could follow a disorderly no-deal Brexit when the UK leaves the EU in March, although most experts say a no Brexit scenario is positive for the economy.
That fear could be overdone. The elected Mayor of London Sadiq Khan is Muslim. Home Secretary Sajid Javid is also of Pakistani heritage. UK law is anti-racist and pro-integration.
You could say the same about the US, which is home to 3.5 million Muslims. Yet Donald Trump’s travel ban on certain nationalities is thinly veiled religious discrimination, and his rhetoric is unfriendly to say the least.
In the European Union undocumented mass migration is a huge political issue after the entry of more than a million mainly Muslim refugees and their fellow travellers from the Middle East and Africa over the past few years.
The UAE welcomes HNW investors of all religions and business backgrounds as residents. Indeed, Dubai first doubled in size at the start of the twentieth century when merchants from Iran fled surging taxation for its free-trade opportunities.
Yet the UAE did not figure in a new list forecasting the top 10 countries for HNW growth in the next five years compiled by Wealth-X researchers using a database of 540,000 HNW individuals.
Nigeria, Egypt, Bangladesh, Vietnam and Poland respectively got the highest scores, followed by China, Kenya, India, the Philippines and Ukraine. But this was a survey of relative growth. The UAE comes near the top for actual new HNW numbers in other surveys. Why?
Well, the UAE ranks as one of the safest nations in the world, with very low crime rates. It’s child-friendly, although its high-standard schools are expensive.
True, the cost of living has been rising sharply. But owning a car is cheap, domestic help affordable, swimming pools and beaches clean, apartments are spacious and the sunshine is free. It’s also genuinely multi-cultural.
Residency is linked to employment and now personal wealth, so there is no unemployment nor real poverty. Millionaires and taxi drivers are both welcome.
Dubai is one of the most modern cities in the world, with excellent roads, a growing metro and tram system. It is also a world-class luxury travel destination. There’s an indoor ski slope, opera house, shopping malls, concerts, cinemas, and first-rate hospitals. The winter weather is excellent.
Dubai residency visas are also super flexible. You only have to actually be resident for a day or two every six months to keep it. But most residents who own property choose to stay much longer than that.
Sure eating out can be very pricey, and while electronics are cheap, clothing is surprisingly costly.
However, luxury homes cost less than half London prices for the best locations. It’s also a tax haven with no income, no capital gains, nor inheritance taxes. VAT is only five per cent. Accommodation is often to a high specification, and the new developments under construction mean there is a huge variety of choice for new residents.
If the inflow of new HNWs becomes a rush, rather than just a growing phenomenon, UAE house prices could rocket due to undersupply, something current residents would probably consider unthinkable after five years of falling prices.
Safety, tolerance and a luxury lifestyle. The UAE has all that is required to become the Monaco or Singapore of the Middle East, and continues to upgrade its residency rules to attract HNWs fleeing intolerance and high-tax countries for a better life.
Investing now in a tolerant nation could pay high dividends. Local equity and home prices are at a cyclical low.
Peter Cooper has been writing about finance in the Gulf for two decades