"Wealthy Flock to Dubai... A New Market for Asset Management Emerges" [Regulation-Free City, Mega Sandbox] ⑪

Interview with Park Piljae, Head of the UAE Office at the Korea International Trade Association
Emerging as a New Industry... Building an Ecosystem
Free Zone DIFC Hosts 120 Family Offices

"We are seeing wealthy individuals from all over the world flocking to Dubai. 'Family offices,' which specialize in managing the assets of group owners, have formed an entire ecosystem here," said Park Piljae, head of the UAE branch of the Korea International Trade Association.

Dubai is a city admired by the wealthy. The tax benefits are particularly striking. There is no income tax, inheritance tax, gift tax, or property holding tax for individuals, and the corporate tax rate is capped at just 9%.

According to the UK investment immigration consulting firm Henley & Partners, Dubai is currently home to 81,200 millionaires. This ranks 18th globally, and the number of millionaires has more than doubled over the past decade since 2014. The 102% growth rate in millionaires is the steepest among major cities worldwide, positioning Dubai as a new hub where the "movement of wealth" is concentrated.

With virtually no regulations, family offices are rapidly emerging as a new industry in Dubai. As of last year, the Dubai International Financial Centre (DIFC) had around 120 family offices and more than 800 related institutions registered. It is estimated that $150 billion-about 30% of the total assets under management by family offices in the Middle East, or approximately 213 trillion won-is concentrated in Dubai.

In an interview with The Asia Business Daily on September 25, Park Piljae, head of the UAE branch of the Korea International Trade Association (pictured), said, "Family offices are so active that they regularly hold conferences." He explained that these companies share information on where they are currently increasing their investment allocations, the criteria they use to select and nurture startups, and even the IT solutions they use. Family offices utilize IT solutions with enhanced security and convenient communication features, to the extent that there are startups dedicated to developing such solutions.

He added, "Family offices in Dubai are forming their own ecosystem, and as professionals from the financial sector move into the family office market, new job categories are emerging and the recruitment market is expanding."

The free zone DIFC, where the UAE branch of the Korea International Trade Association is located, is one of the areas with the highest concentration of family offices. Two years ago, DIFC established the Family Wealth Centre to serve as a hub for family offices and overhauled its system by enacting the 'Family Asset Management Regulations.'

Family offices are classified by their operating model as either 'Single Family Offices (SFO),' which manage the assets of a single family, or 'Multi Family Offices (MFO),' which support multiple families. At DIFC, SFOs, which previously required a financial business license, are now allowed to manage assets with just a general registration.

They have also made it possible to freely design inheritance structures using trusts and foundations, significantly simplifying the process of intergenerational asset transfer. Separate regulations have been established to permit investment in new asset classes such as cryptocurrencies.

Dubai regards 'family asset management' as an industry in its own right and has significantly relaxed legal, tax, and financial regulations. Family offices are treated similarly to financial institutions but can operate with a simple registration process instead of going through complex licensing procedures. The absence of taxes on personal assets, combined with a lack of foreign exchange and overseas investment restrictions, has made Dubai a 'wealth-friendly city' favored by high-net-worth individuals worldwide.

In contrast, in South Korea, families wishing to pool and manage their assets must navigate multiple regulations, including government approval and tax filings, in addition to registration. The top inheritance and gift tax rate reaches 50%, and the burden can increase to as much as 60% when transferring controlling shares. There is also a strict requirement to report overseas financial accounts, so anyone managing assets above a certain amount must file annual reports.

Park stated, "While it would be difficult to apply the Dubai model directly to Korea, if we refer to the financial free zone system and family office support measures, we could prevent the outflow of high-net-worth individuals and talent, support the smooth operation of family businesses, and lay the groundwork for economic growth."