Dubai prepares to welcome more millionaires as rich Brits move their money

The United Arab Emirates is on its way to becoming world top wealth magnet for the third consecutive year, according to Henley Private Wealth Migration Report.

At the same time, the UK – which is the origin of many UAE migrants – is predicted to see its millionaire population grow 17% off by 2028, according to Swiss bank UBS.

High-net-worth individuals are in many cases voting with their feet, seeking greener pastures – or, in the case of tax-free expat hubs like Dubai, sandier beaches – as costs and taxes rise in their home countries. The trend is likely to accelerate after the Labour Party’s landslide election victory in June, according to some financiers.

“There are push and pull factors driving this trend of millionaires choosing to move to Dubai,” Karim Jetha, a longtime regional investor who moved to the UAE from the U.K. during the pandemic, told CNBC.

“Push factors include the prospect of tax increases under a new Labour government. For example, one of Labour’s campaign pledges was to introduce VAT on private school fees, which would increase costs by 20%,” he said. “Pull factors include Dubai’s perception of being extremely safe and visa reforms that encourage migration.”

According to a Henley report published in June, the UAE will see a record net inflow of 6,700 millionaires from around the world by the end of 2024. This is nearly double that of the second-ranked country on the list, the United States, which is expected to welcome a net inflow of 3,800 millionaires in the same time frame.

“With zero income tax, golden visas, a lavish lifestyle and a strategic location, the UAE has cemented its position as the world’s number one destination for millionaires to emigrate,” the report said. The UAE Golden Visa is a long-term residency visa that allows foreign residents to live, work or study in the UAE.

While millionaires migrating to the UAE are mainly from India, the Middle East, Russia and Africa, a large number of Britons and Europeans are also expected to move to the lavish desert emirate, the report added.

Sunita Singh-Dalal, partner at Hourani Private Wealth & Family Offices in Dubai, said the achievement was largely due to developments and reforms in the UAE’s “wealth management ecosystem”.

“In less than five years, the UAE has put in place a robust legal framework that provides wealthy individuals with a range of innovative solutions to protect, preserve and grow their wealth,” she said.

Factors such as modern infrastructure and a strong international school system, geographical connectivity, low crime, no income tax, visas for remote workers and several investment incentives also help attract the wealthy to Dubai.

By contrast, Britain will see its millionaire population fall from 3,061,553 last year to 2,542,464 by 2028, according to forecasts from the UBS Global Wealth Report, published in June. But it’s important to note that Britain’s large millionaire population – the third-highest in the world – includes many foreign residents from places like Russia, the Middle East and elsewhere.

Now the British government is gradually phasing out homeless – allowing wealthy and often foreign residents to avoid paying UK tax on overseas income – much of that population would seek to renounce their UK residency.

Hannah White, director of the independent think tank the London Institute of Government, commented in the Henley report: “Capital outflows due to the economic and political uncertainty in the UK risk accelerating due to further unwelcome policy decisions.”

She pointed to the 40% tax already in effect on properties valued above the £325,000 ($417,755) threshold, as well as the end of the UK’s non-resident tax regime starting in 2025.

The current Labour government has also pledged to scrap the 20% VAT exemption on private school fees in England, which would make education significantly more expensive for families sending their children to prestigious schools.

“Labor’s commitment to abolish the 20% VAT exemption is another unwelcome development,” said White.