A growing number of family offices are setting their sights on the Middle East as their preferred headquarters, driven by the region’s burgeoning wealth creation prospects, according to a senior executive at Citi Private Bank.
Selim Elgen, MEA Head of Citi Private Bank, articulated the emerging trend, stating, “We are witnessing an increasing number of businesses and families choosing to establish their headquarters in the Middle East. The region is gaining prominence as a crucial hub for Citi, enabling us to deepen our engagement with clients and actively contribute to wealth generation in the area.”
Elgen further underscored the evolving dynamics within client families in the region, noting that many are navigating various stages of wealth transfer to the next generation. In response, Citi Private Bank has adopted a highly focused strategy to address the full spectrum of opportunities arising from this transition.
These insights were gleaned from Citi Private Bank’s 2023 Family Office Survey conducted by its Global Family Office Group. The survey unearthed key concerns shared by family offices, which included inflation, interest rate hikes, and geopolitical uncertainties, particularly amidst the backdrop of escalating US-China tensions.
However, the survey highlighted regional nuances in these priorities. Notably, the Russia-Ukraine conflict emerged as the predominant concern for the Middle East and Europe, registering at 52%. Conversely, North America was preoccupied with rate increases (64%), while the Asia Pacific region grappled with US-China relations (64%), and Latin America was preoccupied with inflation (63%).
The survey also scrutinised portfolio performance, revealing that Asia Pacific was the region most impacted by portfolio declines, with 36% of respondents reporting such declines. In contrast, Europe, the Middle East, and Africa reported robust gains, with a significant 72% of respondents attesting to portfolio growth.
Moreover, the survey unveiled a more sanguine outlook towards global investment grade fixed income in Europe, the Middle East, and Africa, with 73% of respondents expressing optimism.
Leadership succession planning emerged as a notable area of commitment among family offices in Europe, the Middle East, and Africa, reflecting a robust focus on ensuring a seamless transition of leadership. However, the survey identified a deficiency in family education programs for the next generation, with particularly pronounced shortfalls in Europe, the Middle East, and Africa, where 74% of respondents indicated a lack of such programs.
When it came to direct investment preferences, technology emerged as the favoured sector across regions, with the exception of Latin America, where real estate garnered preference at 57% versus 43% for technology.
The survey also underscored disparities in attitudes towards healthcare. In Europe, the Middle East, and Africa, and Asia Pacific, 58% and 56% of family offices, respectively, identified healthcare as one of their top three sectors of interest, while only 26% in North America held a similar perspective.
Citi’s comprehensive survey featured over 40 questions designed to gauge clients’ investment sentiment and portfolio strategies in the midst of ongoing geopolitical tensions, macroeconomic challenges, and market volatility at the outset of 2023. The survey garnered responses from 268 participants, shedding light on the evolving dynamics shaping the family office landscape.