The Dubai model creaks: capital fleeing to Singapore and Hong Kong

by Mattia Bernardo Bagnoli

The Dubai model is starting to crack. Security, low taxation, excellent international connections. The war has called everything into question and every passing day could worsen the situation. Those who have invested in real estate can only wait and hope. A different story, however, for liquid capital. In recent days, dozens of wealthy investors, mostly Asian, have been working to transfer funds to other regional financial centers, with Singapore and Hong Kong at the forefront. It is too early to declare the end of the Gulf as a playground for the global elite, but for some, it is certainly already 'goodbye Dubai'.

Ryan Lin, a lawyer specializing in private wealth based in Singapore, told Reuters that six or seven of his twenty clients based in Dubai, each of whom owns an average of 50 million dollars in assets, contacted him this week and three of them plan to immediately transfer their assets to the Asian city-state. Iris Xu, director of the global business and financial services provider Anderson Global, stated that this week 10-20 'family offices' have contacted her company for information on transferring assets from the Middle East to Singapore, fearing that the conflict may drag on (family offices are companies that manage the portfolios of the wealthy). "Dubai has always been synonymous with tax advantages but now I think this aspect may no longer be the top priority," she said.

It is a sentiment found, on the western side, among the hundreds of British expats who, for example, hurriedly returned home at the outbreak of the conflict: a stark contrast to the narrative of recent years, which saw the end of the era of London under the blows of Labour taxation. Indeed, among social media and forums, there were those who speculated about linking taxation to citizenship rather than residency, as Americans already do. Because it is too convenient to enjoy a tax-free life in Dubai when everything is going smoothly and then get repatriated under the escort of the Royal Air Force if things go south. Moreover, the very issue of connections could now sink the Gulf, which has so far been perfectly situated between Asia and Europe. "Even if the conflict ended tomorrow, continuing to fly back and forth would still be difficult: it’s a matter of trust," says an Asian financial consultant, who stated he has spoken so far with 13 clients based in the United Arab Emirates, more than half of whom are seriously considering relocating their assets to Singapore.

That said, years of investments cannot be erased in one week of war. Jeremy Lim, co-founder of GrandWay Family Office, is opening a family office in Abu Dhabi and has stated that his plans have not changed. "The real determining factor for companies would be if the United Arab Emirates were to be directly involved in a conflict alongside one of the parties," said Lim.