Ray Dalio’s purchase of a luxury beachside residence on Abu Dhabi’s Saadiyat Island is part of a Middle Eastern outpost that also includes a branch of his family office in the city’s financial district, according to people with knowledge of the matter. His growing footprint is emblematic of the changes that have turned the United Arab Emirates into an important hub for traders. The past couple of years have seen highly paid professionals from more than 100 firms arrive, an influx that’s rippling through the nation.
While the Israel-Hamas war has brought a stark reminder of the volatility facing the Middle East and raised questions about whether it could hamper the region's recent boom, several funds said their UAE expansion plans remained unchanged.
In recent years, UAE officials have emphasized that they'd like to maintain friendly relations with nations in the Middle East and beyond, a stance that’s helped the country’s economy in the midst of pandemics and wars. During the Arab Spring that began in 2010, as local uprisings roiled many Middle Eastern governments, the UAE remained politically stable and even benefited from cash inflows from other parts of their region as wealthy families rushed to safeguard their money. When Covid-19 rippled through the globe, the country’s easy visa policies attracted expats. Russian money came flowing in after Moscow’s invasion of Ukraine because the UAE didn’t impose sanctions.
“Traditional, less attractive jurisdictions such as London and Hong Kong are losing out on investors and professionals who are flocking to the UAE,” said Sunita Singh-Dalal, a Dubai-based partner at law firm Hourani & Partners, who is focused on private wealth and family offices.
When Brevan Howard Asset Management unveiled plans to open an outpost in Abu Dhabi Global Market, requests from staff to relocate far exceeded the number of employees the firm could accommodate. The macro-trading firm had to limit the number of people moving to the new office, according to a person with knowledge of the matter.
Less than a two-hour drive away in Dubai, where heavyweight firms like Izzy Englander’s Millennium Management and Michael Gelband’s ExodusPoint have set up shop, office rents have been rising faster than in New York or London. Hot dining spots are packed. Workers in the Dubai International Financial Centre bemoan the traffic snarls that regularly jam the roads around the financial district. Private jet usage at one of the city’s VIP terminals is set to reach an all-time high.
One in five of the world’s top 100 hedge funds now has an office in Dubai, while 10 out of 15 of the top-tier multi-strategy hedge fund platforms have a presence, according to industry tracker With Intelligence, compared with just a handful a decade ago.
Tables at LPM Dubai, a popular eatery in the DIFC, are packed day and night with bankers and traders from nearby offices. There’s been a surge in bookings for chef’s tables and private dining rooms — for which minimum spends can range from $2,700 to $4,000 — at restaurants like Gaia and nearby Shanghai Me.
At ICD Brookfield Place, one of Dubai’s swankiest towers in the heart of the city’s business hub, space is almost sold out. A 22% surge in villa rents has even well-paid hedge fund executives complaining about being priced out of their homes.
Location, Location
The shift to Dubai and Abu Dhabi began as Covid shuttered many global cities and is gaining pace because of the cities’ proximity to deep-pocketed funds, as well as the emirates’ ease of doing business, tax-free status and favorable time zones. It’s making the UAE a serious competitor to London and Hong Kong, as well as centers like Miami, which has attracted the likes of Citadel founder Ken Griffin.
From a quality-of-life perspective, shifting to Abu Dhabi “is analogous to opening up in Miami,” said Douglas Greenig, who co-headquartered his hedge fund Florin Court Capital LLC in Abu Dhabi and London two years ago after considering locations like Hong Kong and Singapore.
Now, about a dozen Florin Court employees in Abu Dhabi trade everything from Turkish interest rates to French electricity, Chinese methanol and global credit default swaps — while making small bets on regional markets.
In a show of its commitment to the city, Brevan Howard has already moved some of its most senior members, including co-founder Trifon Natsis and head of compliance Ryan Taylor, to Abu Dhabi, where it eventually plans to employ more than 100 people.
Last month, the macro trading powerhouse with more than $34 billion in assets officially opened its office with about 100 traders, bankers, clients and executives crowding into new headquarters at ADGM, according to a person who attended the event. Among them were co-founder Alan Howard, former British Chancellor George Osborne and Victor Haghani, one of the founding partners of Long-Term Capital Management.
Abu Dhabi and Brevan Howard go well together because both like to be out of the limelight, Chief Executive Officer Aron Landy joked during the launch party, which later moved to the Peruvian restaurant Coya, where guests enjoyed sushi, potato croquettes and Laurent Perrier champagne while a DJ played in a private area.
Even with its recent success in luring traders, the UAE has a long way to go to catch up with more established hubs such as New York, where With Intelligence estimates about 1,800 hedge fund firms are based. London has about 820 and Hong Kong is home to about 470 hedge fund companies.
The UAE also faces competition from cities such as Paris, which is emerging as a top destination for hedge funds hunting for a new base in the European Union, now that the City of London is outside the bloc. In Asia, where strict Covid restrictions forced many executives to flee, hubs like Hong Kong and Singapore have been pushing to get traders back. Despite that competition, the advances of the UAE are hard to ignore.
In recent months, Wellington Management and Hudson Bay Capital Management have also expanded to Dubai, joining the likes of LMR Partners Ltd., a $9.8 billion Hong Kong-based hedge fund. They join a string of banks, wealth managers, family offices and asset managers expanding in the country.
“It reminds me of what Hong Kong used to be like 15 years ago,” said Marlin Naidoo, global head of capital introduction and consulting at BNP Paribas, who was in Abu Dhabi and Dubai recently. “You have a lot of global blue-chip hedge funds moving across both the cities, bringing in talent. It just felt there was a lot of energy, there was a lot of excitement when you meet managers, when you meet all the allocators in the region, and it was clear that Abu Dhabi is definitely trying to make a big push.”
Executives who’ve made the move say the UAE timezone, which straddles European and Asian trading hours, makes it the perfect location to cover both markets. The desert cities’ summer temperatures of 120°F (49°C) are less of a deterrent as other global cities heat up.
Meanwhile, the region’s cash-rich sovereign wealth funds, which have hefty cash piles and have been investing globally, are a huge draw.
Keeping Pace
The surge of activity puts Dubai at the risk of buckling under the weight of its own success. The jump in housing prices is already pressuring many long-time residents. Inga Brykulska, an agent with Driven Properties in Dubai, said executives moving with family offices or hedge funds from places like Singapore ideally want single-family houses, but often settle for newly built apartments when they can't find homes to their standards on the market. She says she's seen several people rent penthouses in the new waterfront development Port de la Mer, where four- and five-bedroom apartments are renting for about $9,000 to $11,000 a month.
Meanwhile, waiting lists for many of the city’s top schools and member clubs have started to run impossibly long. Traffic jams leave office goers contending with longer commutes, and it can take 15 minutes or more just to leave a parking lot.
“You’re seeing huge amounts of growth in a number of areas,” said Christopher Gardner, a partner at law firm Dechert LLP, which helps to set up hedge funds in the country. “The challenge is building the infrastructure to keep that industry going — so having sufficient service providers and the continued support from regulators to keep pace.”
The DIFC has attracted wealth and asset-management firms from the US, Gulf, Europe and UK, a spokesperson said. “We are seeing the ripple effect of that success.” The center is engaging with local authorities to streamline the traffic flow around the district.
As Dubai races to keep up, its quieter neighbor Abu Dhabi — which manages about $2 trillion in sovereign wealth capital — is making headway. The city's financial sector grew almost 30% on an annual basis in the second quarter as its efforts to attract financial firms paid off. For many executives, the UAE capital is where business is forged, while Dubai is their preferred destination for a weekend of fun.
The emirate’s main business zone, Abu Dhabi Global Market, is home to eight hedge funds, while three more are in the application stage and as many as 40 more are in talks to join. The ADGM’s tenfold expansion makes it one of the world’s largest financial districts, roughly the size of Los Angeles International Airport.
A series of bridges linking Abu Dhabi’s financial district to its city center have been constructed at breakneck speed, while swanky restaurants such as Les Dangereux and the Michelin-starred Talea have opened up in the once-sleepy capital. Financial professionals are picking up residences at the luxury Rosewood and Four Seasons hotels connected to Abu Dhabi’s financial center while others are choosing beachside living on Saadiyat Island, a short drive away. Nearby are the Louvre Abu Dhabi museum and the under-construction Guggenheim Abu Dhabi.
People “want to move to a place from a tax purpose that’s efficient, where the quality of life and connectivity is great,” said Arvind Ramamurthy, chief of market development at ADGM.
Catching Up
Despite its ambitious plans, many offices in ADGM remain empty, raising questions about which firms are putting boots on the ground and committed to country for the long term. And just a tiny fraction of the influx of capital has flowed into local markets, with most money managers continuing to trade outside of the Middle East.
“Many people who are moving to Dubai don’t know the local markets and didn’t come to here to trade UAE,” said Christian Cabanne, Bank of America Corp.’s head of equity capital markets in Central and Eastern Europe, the Middle East and Africa. Even so, “by virtue of being here and observing what’s happening around them, some of them are willing to trade more local equities.”
For Dalio, Abu Dhabi offers several benefits. The 74-year-old billionaire is planning to spend more time in the UAE capital after buying the penthouse in Abu Dhabi, according to people with knowledge of the matter. He has cultivated a close relationship with the UAE leadership over several decades. At one point, Abu Dhabi entities were some of Bridgewater’s biggest early investors, the people said, even though the firm doesn’t have a presence on the ground.
He’s also deepening ties with National Security Adviser Sheikh Tahnoon bin Zayed Al Nahyan, the brother of the UAE’s president who’s fast becoming one of the world’s most influential investors, the people said. Bloomberg reported in April that plans are underway to bring in a team of experienced investment professionals to lead the local arm of the Dalio Family Office, which helps handle his private investments and philanthropic donations. A representative for Dalio declined to comment.
The UAE is “going to do great over the next decade,” Florin Court’s Greenig said. “You can put money on that.”
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