An alternative investment outlook by Salmaan Jaffery, Chief Business Development Officer at DIFC Authority.
As the global shift in talent and capital flows defines the post-pandemic world, Dubai has emerged as the region’s preferred location for alternative investment.
Dubai has experienced a large influx of new entrants joining DIFC’s expanding alternative investments ecosystem, which includes large and smaller multi-strategy hedge funds, investment management platforms, and various others from Asia, North America, and Europe. Today the Centre is home to 65 pure play hedge funds, with 45 of these being part of the ‘billion-dollar club’. The recently launched DIFC Funds Centre is DIFC’s unique proposition for smaller asset management clients, seeking flexible working solutions, accelerated time to market, as well as networking opportunities to help them grow and scale.
Reflecting on this year, we unpack the Centre’s exceptional progress as a preferred global hub for hedge funds and highlight the key trends that are shaping a strong outlook for the sector in 2025.
To further inform our view on sectoral trends, DIFC, in partnership with the Alternative Investment Management Association (AIMA), recently gathered over 30 senior executives from the alternative investments industry for a roundtable discussion in Dubai. This article builds on themes from that discussion which explored the region’s evolving investment climate, regulatory considerations, and practical strategies for hedge fund managers to get the most out of regional opportunities.
Private wealth migration supporting hedge fund interest
The Middle East’s geoeconomic position as well as its growing role in shaping the global economy has accelerated the migration of hedge funds to Dubai. Whilst many hedge funds are managing existing portfolios in Dubai, establishing a presence in the city gives asset managers access a rapidly growing pool of private and family wealth, currently exceeding USD 4trn.
The UAE alone has a large concentration of private wealth, estimated at USD 996bn and Dubai has the highest concentration of wealth in any Middle Eastern city. Keen to tap into high-growth opportunities within the country and the wider region, in contrast to the challenging operating environments in many traditional and established global financial hubs, alternative investment and asset management players are actively moving to the UAE.
Risk-based and proportionate approach to regulation
Another key driver of DIFC’s transformation into a global hub for the alternatives investments industry is its robust regulatory framework, which has supported the sector’s rapid growth. The Dubai Financial Services Authority’s (DFSA) proactive stance on policy development, fast-tracked approval process, risk-based approach to supervision, and open communication with stakeholders, has helped build a strong pipeline of applicants and enhanced the quality and scale of businesses coming to DIFC. A combination of this regulatory approach, an internationally recognised and independent common law system, and world-class infrastructure have made DIFC the preferred destination for hedge funds.
A deep and broad growth-enabling ecosystem
The Centre’s hyper-connected ecosystem supports hedge fund and portfolio managers, especially those who are new to the region, providing them access to a broad range of support services. DIFC is the only financial centre in the region operating at scale and hosts prime brokers, law firms, tax advisors, consulting firms, recruitment agencies, and many others that collectively support its thriving business community.
Pursuing a bigger regional footprint
Hedge funds and alternative asset managers moving to Dubai, including those who already have longstanding client relationships in the region, recognise the importance of having people on the ground. Building a physical presence here allows them to be closer to their institutional and private clients and gain a better macroeconomic understanding of regional markets.
Firms setting up local offices to tap into the region’s growing pools of private and family wealth, are looking at their entry into Dubai as a long-term play and are aiming for a bigger footprint in the region. Hedge funds are starting to establish bigger to conduct a wide spectrum of portfolio and risk management, business development and marketing activities.
Demand for top-tier talent as firms look to hire and expand teams
New and existing players in the sector have brought in key hires to their Dubai offices and have started building out their teams and expanding headcount, with many others planning to do so in the near future. For companies looking to hire top-tier talent, Dubai’s high quality of life isa key supporting factor. The migration of high-calibre financial services talent to Dubai is being driven by the emirate’s unparalleled offering for expatriates – one of the world’s top safest cities, long-term residence visas, zero-income tax policy, world-class housing, and international schooling standards. DIFC continues to attract some of the world’s brightest minds across the financial services spectrum, with nearly 44,000 high-calibre professionals.
Amidst growing optimism within the alternative investments sector, driven by exponential growth opportunities in the UAE and the wider region, during 2025, DIFC remains committed to propelling Dubai’s position as the destination-of-choice for hedge funds and the alternative investments sector.