The Month

The International Private Client in the Middle East during COVID-19

Middle Eastern families tend to fall into three categories when considering the effect of COVID-19 on their planning abilities: Families who…

By Amy Glover / August 26, 2020

Middle Eastern families tend to fall into three categories when considering the effect of COVID-19 on their planning abilities:

  1. Families who have taken stock of what is happening, reflect and start communication with the rest of the family with ease
  2. Those who continue to feel exposed (rife amongst the NextGen), with family members scrutinising their decision-making process, putting them to shame and criticising their decisions
  3. Happy and grateful families who have adopted and implemented a system that allows them to start looking for opportunities to invest, rather than just surviving

Macro trends: At the moment, macro trends include institutionalisation and an increased upswing in the creation of family offices to preserve wealth. With the NextGen, they are seeing increased advice regarding mobility and seeking citizenship in the UK/US/France/ Germany. For those seeking investment opportunities, there is a shift towards private equity, for opportunities to leverage capital and return home to build local businesses.

Tax changes: The Gulf Cooperation Council (GCC) have started to increase taxes between 5-15% and have introduced VAT, tax for custom duties, and so on. There is also a model to decrease the cost of living to encourage expats to service the region as current subsidies only target the local merchants. Wealth tax has been institutionalised.

Oddly enough the GCC has finally realised that they can't rely on oil forever. To make the region more attractive, some governments have embarked on the modernisation of the legal system to attract foreign investment, which is a novelty in this part of the world.

Shift in advice: There has been a major shift in the mindset of planners in the Middle East. Encouraging family offices into reflection and transformation exercises is key. There are a handful of family businesses listed on the stock market in the Middle East, between 50-100. Family businesses are being actively encouraged to list over the next 5 years, to raise capital (many don't need to), to force them to clean up their governance, and to invest in local markets. Anticipated to be much busier over the next decade.