Shortly after Iran's first missile and drone attacks on Dubai last week, two Indian businessmen there tried to transfer more than $100,000 each from their local bank accounts to Singapore to hedge their risk.
Technical problems following the Iranian attacks initially thwarted their plans, the businessmen told Reuters, speaking on condition of anonymity because of the sensitivity of the situation. One of them later managed to transfer the money to his account in Singapore through another bank in the Emirates, Reuters reported.
Many other wealthy Asians are asking or are already taking similar steps to shift their assets from Dubai to regional financial centers like Singapore and Hong Kong. Financial industry advisers and advocates say the U.S.-Israeli war on Iran is damaging the Gulf's "safe haven" status and unsettling investors.
While wealthy investors typically diversify their investments across regions and asset classes, they base their decisions on tax, regulatory, privacy and operational considerations. Dubai has emerged in recent years as a hub for entrepreneurs and wealthy families from Asia, particularly China, who are drawn to its favorable policies. In addition, the Gulf has become an attractive investment destination thanks to a thriving real estate and infrastructure market.
This trend is now being challenged, as attacks on Dubai and Abu Dhabi have shaken the United Arab Emirates' (UAE) reputation for stability.
Ryan Lin, a Singapore-based private wealth lawyer, said he was contacted this week by six or seven of his 20 Dubai clients, each with an average of $50 million in assets. Three of them are planning to move their assets to Singapore urgently. One client is “seeing how quickly he can move everything to Singapore,” Lin said.
Iris Xu, director of global corporate and fund services firm Anderson Global, said her firm had received between 10 and 20 family offices this week asking about moving assets from the Middle East back to Singapore, amid fears the conflict could drag on. Family offices are companies that manage the portfolios of wealthy individuals. “Dubai has always been attractive because of the tax breaks, but now I think the breaks may not be their main priority,” she said.
A wealth management advisor in Singapore, who spoke on condition of anonymity because he was not authorized to speak to the media, said he had spoken to 13 UAE clients so far, more than half of whom were seriously considering moving their assets to Singapore. “The journey will be challenging even if the conflict ends tomorrow. It’s a matter of trust,” the advisor said.
Grace Tang, executive director of Phillip Private Equity, says her clients, mostly from Asia, are nervous, with 10 to 20 of them asking about moving their wealth to Singapore to preserve their capital, Index.hr reports.
However, not all asset managers believe that the current conflict in the Middle East is causing an immediate capital flight. Dhruba Jyoti Sengupta, chief executive of Dubai-based wealth management group WRISE Private Middle East, said the firm has not seen “serious talks of capital flight” because clients are confident in the long-term sustainability of the UAE.
“They are sophisticated global investors, already internationally diversified, but also deeply invested in the UAE’s growth story,” he said. “Despite the broader geopolitical turmoil in the region, clients feel safe and protected.”
The Governor of the UAE Central Bank, Khaled Mohamed Balama, said on Thursday that the banking and financial sector is resilient, strong, stable and well-positioned to withstand regional events, adding that banks, financial companies and insurers are operating normally and without disruption.
Singapore's leading asset managers, Bank of Singapore and DBS Group, said their clients are closely monitoring developments in the region and are following a wait-and-see approach for now.
As the UAE struggles to maintain its safe haven status, some are pressing ahead with their expansion plans in the emirate. Jeremy Lim, co-founder of GrandWay Family Office, is in the process of opening a family office in Abu Dhabi and says his plans haven’t changed — as long as the UAE doesn’t get directly involved in the conflict and there’s no further escalation from Iran.
"The real problem for business would be if the UAE were to directly engage on one side of the conflict," Lim said.
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