Abu Dhabi Gains Ground on Dubai in Financial Sector

By Nell Mackenzie, Federico Maccioni and Hadeel Al Sayegh
DUBAI (Reuters) – Abu Dhabi is emerging from Dubai's shadow as it attracts its own share of asset managers' and billionaires' wealth, helping to cement the United Arab Emirates' role as an alternative to global financial hubs.

Lacking rich oil reserves, Dubai has built up its position as the region's No. 1 financial center over the past two decades, with its allure of low taxes, the application of English common law, and exposure to the region's brisk economic growth.

Globally, Dubai ranks 16th in the latest tally from the Global Financial Centres Index, while Abu Dhabi is 35th, with both ranked number one and two, respectively, for the Middle East and Africa region.

However, over the past few years, Abu Dhabi—holding 90% of UAE's oil reserves—has accelerated efforts to diversify its economy, leveraging its vast wealth and sovereign funds that together manage almost $2 trillion to boost non-oil growth.

The emergence of companies across various new sectors and Abu Dhabi's investments have drawn attention from the international financial community.

> "It's completely changed in the past year; there's been an influx of money managers, hedge funds, alternatives etc. coming to conferences to raise funds here," said Ryan Lemand, co-founder and CEO of Abu Dhabi-based fund management and investment advisory firm Neovision Wealth Management.

Some companies have set up operations in both Dubai and Abu Dhabi to gain an edge over those travelling from financial capitals like London, New York, or Hong Kong to raise new business.

Lemand spoke ahead of the Alternative Investment Management (AIM) Summit in Dubai, which drew hundreds of institutions globally, including big names like Brevan Howard and JPMorgan Asset Management.

Statistics indicate that while Dubai remains well ahead, Abu Dhabi shows clear momentum. The Dubai International Financial Centre boasts over 420 wealth and asset management firms, while Abu Dhabi had 112 fund firms registered as of June.

New Arrivals

Attendees of the AIM Summit noted rising company registrations, the appeal of sovereign wealth funds, and easier licensing compared to other financial centers. Billionaire Ray Dalio and other hedge funds like Brevan Howard now have a presence in Abu Dhabi. Asset managers PGIM and Nuveen are also among new arrivals. General Atlantic, a New York-based private equity firm, has received preliminary approval to operate there.

Abu Dhabi is recognized as the world's richest city in terms of assets managed by sovereign wealth funds, holding $1.7 trillion, while Dubai manages around $500 billion, according to a recent Global SWF report. Some investment firms find the presence of sovereign wealth funds a significant incentive to set up in Abu Dhabi.

Both cities offer a favorable regulatory environment, attracting financial investors. UAE's ambition to become a global crypto center, with Dubai's regulator for the emerging sector operational since 2022, places it ahead of global counterparts.

Brevan Howard handles a significant portion of its crypto trading from the UAE, as mentioned by its compliance head during the AIM conference.

Both cities are also enhancing tourism and property investments; however, many believe Dubai still holds an advantage due to its history of drawing international finance and vibrant nightlife. With attractions like the world's tallest skyscraper, Dubai maintains a clear edge in entertainment venues and overall buzz in its financial district.