Dubai Emerges as the Next Global Hedge Fund Hub

A report titled ‘Dubai: The next global hedge fund centre – opportunities and outlook’ – released today by Dubai International Financial Centre (DIFC) revealed Dubai’s growth and increased role as a global hub for hedge funds and alternative investments.

DIFC is currently driving this growth and is in discussions with over 60 global hedge funds that are looking to establish offices within the Centre.

The report is the first in a thought leadership series being released in 2023 by DIFC and covers key insights on the global hedge fund industry. It also highlights the rapid expansion of established hedge funds into Dubai, and outlines DIFC’s value proposition as a gateway to the MEASA region as well as its growing role as a global hub for hedge funds.

In 2022, DIFC experienced a 54 per cent increase in the total number of hedge funds setting up within the Centre, where a strong base of established firms already exists. Approximately two thirds of DIFC-based hedge funds originate from the US and UK, including two of the world’s ten largest hedge funds.

As the number and scope of hedge funds established in DIFC grows, the Centre envisions a further deepening of the ecosystem, including smaller-scale hedge funds, additional prime brokers, and technology start-ups. This augmentation of the ecosystem creates a flywheel for talent and firms, thereby further differentiating Dubai as a global hub for hedge funds.

Arif Amiri, CEO of DIFC Authority said: “DIFC’s remarkable growth significantly contributes to the goal of the Dubai Economic Agenda (D33) to transform Dubai into one of the world’s top three cities for business. It is encouraging to see that we are attracting the attention of international hedge funds, with a record number registering in 2022, up 54 per cent YoY, and more in the pipeline. This reflects Dubai’s and DIFC’s ability to keep pace with global economic shifts and to provide an ecosystem for the financial sector that brings new opportunities for growth”.

“Several hedge funds have already begun to expand into new emerging markets as operating environments in their native markets become increasingly challenging. Moreover, long-established markets, no longer offer growth prospects or cost efficiencies that can compete with those available in emerging hubs. Hedge funds are showing increasing interest in Dubai as a gateway to the region, looking to establish a presence in DIFC – a rising global hub for alternative investments and hedge funds.” said Nadim Najjar Managing Director, Central & Eastern Europe, Middle East & Africa (CEEMA) Refinitiv, an LSEG business.

Hedge funds have demonstrated resilience in a challenging global environment, with their global assets under management (AuM) reaching over USD 4.8tn at the end of 2022, up 1 per cent from the end of 2021, according to data from BarclayHedge.

Hedge funds setting up in Dubai will find it an ideal gateway to Western Europe and the high-growth emerging markets of the Middle East, Asia and Africa. The Global Financial Centre Index places Dubai among the top quartile globally. DIFC is one of only ten financial centres in the world to be classified as a broad and deep global leader and ranked among the top 15 financial centres in terms of the index’s Government and Regulatory, Professional Services and Business Environment sub-indicators.

DIFC also offers a robust regulatory model backed by the Dubai Financial Services Authority (DFSA), with a legislative system that is consistent with English Common Law – the global standard for financial services. DIFC also has its own set of civil and commercial laws and regulations. Focused on driving the future of finance, DIFC offers a tax efficient operating environment. In addition, DIFC’s ecosystem provides a broad network of partners for portfolio managers looking to set up in Dubai. Hedge funds can benefit from a large and growing bank of support services, including prime brokers, law firms, consultancies, and tax specialists.

As Dubai and DIFC continue to attract financial players from around the world, including hedge funds seeking new places to establish their operations, they in turn benefit from access to the region’s rising retail and institutional wealth, since the UAE has been experiencing the highest net inflow of millionaires in 2022 according to the Henley Private Wealth Migration Dashboard. Private wealth in the country is estimated to total USD 966bn, with the number of high-net-worth individuals (HNWIs) projected to grow 40 per cent by 2031.

Learn more about opportunities for hedge funds by downloading the complimentary ‘Dubai: The next global hedge fund centre – Opportunities and Outlook’ Report here.

The report, which was unveiled during a DIFC-hosted webinar, where 800 participants registered from the MENA region, US, UK, Europe, Hong Kong and Singapore. Speakers included Redha Al Ansari, Head of Research MENA, Refinitiv, an LSEG business; Niamh Taylor, Head of EMEA, Schonfeld; Dominic Rieb-Smith, Managing Director, EMEA Head of Prime and Alternative Sales, J.P. Morgan; and Chris Cameron, Director, Conduct Team (Supervision and Authorisations), Dubai Financial Services Authority.