Shifting Wealth Strategies in the Gulf Region
A new generation of heirs in the Gulf region is shifting their families’ long-established wealth strategies, moving away from traditional investments in real estate and local businesses toward more modern options in cryptocurrency and hedge funds. Taking a leading role in this transition are the 28-year-old Kanoo twin brothers, Abdulaziz and Abdulla, from the prominent Bahraini Kanoo family.
The Kanoo Twins and Digital Investments
Their family’s investment office made headlines after they advocated for a Bitcoin investment back in 2020, a recommendation that faced initial skepticism from senior investors, including James Burke, the head of investments at Kanoo Group. After deliberation, the investment committee approved a modest allocation to Bitcoin, which was subsequently sold for a profit, paving the way for further investments in digital assets within the firm.
In addition to managing their family’s wealth digitally, the Kanoo twins are now also spearheading a dedicated digital asset firm that provides cryptocurrency investment services not only to their family office but also to other family-owned enterprises. This development reflects a broader trend among affluent families in the Middle East, who are increasingly delegating authority over their assets to their younger relatives and professional management teams.
Financial Institutions and Wealth Management Trends
The changing dynamics of wealth management in the Gulf are prompting major financial institutions, including Citigroup, Barclays, and Deutsche Bank, to enhance their wealth management divisions to attract part of the estimated $1 trillion in wealth that is expected to transition within the region over the coming years. Dubai is becoming a hotspot for hedge funds with more than 70 currently based there, while Dubai’s neighbor, Abu Dhabi, hosts renowned firms like Brevan Howard and Marshall Wace.
The burgeoning presence of these financial entities is encouraging Gulf family offices, which are now undertaking their own research and preferring diversified investment strategies. Small hedge funds benefit significantly from even moderate capital injections, typically around $5 million, according to Edwin Lawrence of Nettlestone Capital Advisors.
Conservative Characteristics and Governance Structures
Despite this progressive shift, many family portfolios in the Middle East still exhibit conservative characteristics compared to their Western equivalents, tending to hold more liquid assets and real estate. Research by HSBC and Campden Wealth illustrates that complex governance structures, necessitated by generational differences, add layers of oversight in family businesses, as Abdulla Kanoo remarked about the need for governance and risk management in such settings.
Rising Interest in Modern Investments
Nevertheless, interest in hedge funds and cryptocurrencies is visibly on the rise among Emirati families, with Apex Group’s Bhaskar Dasgupta pointing to increased allocations toward hedge funds and the rapid uptake of crypto investments. Concepts such as tokenized real estate and innovative digital yield strategies are finding favor as well.
Younger leaders, like 31-year-old Kevin Chalhoub of the luxury Chalhoub Group, are promoting environmental, social, and governance (ESG) investing and even running electric vehicle rental services in Dubai, signaling a shift towards modern values.
The UAE as a Hub for Blockchain and Cryptocurrency
As the UAE continues to assert its position as a central hub for blockchain technology and cryptocurrency finance, regulatory clarity is drawing global attention. A state-backed investment firm in Abu Dhabi is reportedly gearing up to make a substantial $2 billion investment in Binance, utilizing USD1, a stablecoin associated with the Trump family-affiliated World Liberty Financial. Experts speculate that the UAE is set to become a pivotal area for other crypto and stablecoin initiatives, particularly in light of the European Union’s newly enacted Markets in Crypto-Assets (MiCA) regulations.
