For decades, the world's wealthiest individuals opted to secure their assets in various overseas havens, ranging from the Cayman Islands and Switzerland to the British Virgin Islands.

However, there is a notable shift in this trend as a new wealth hub gains immense popularity among billionaires—the towering skyline of Abu Dhabi.

Prominent figures like cryptocurrency's wealthiest man, Zhao Changpeng, India's Adani family, hedge fund billionaire Ray Dalio, and Russian steel magnate Vladimir Lisin are among the numerous high-net-worth individuals establishing special purpose vehicles (SPVs) in Abu Dhabi's international financial center this year, as reported by Bloomberg News after reviewing hundreds of corporate filings in the United Arab Emirates.

The number of SPVs in Abu Dhabi Global Market (ADGM) has surged to over 5,000 from just 46 in 2016, as per data compiled by M/HQ, a leading wealth advisory firm specializing in their establishment.

While the specific details of where billionaires relocated their assets, the reasons behind the move, or the contents of each SPV remain undisclosed, the substantial increase in wealth flowing into Abu Dhabi reflects a broader global shift in how the world's affluent individuals safeguard their fortunes.

“ADGM is a great place to set up SPVs and it’s increasing sharply,” said Mr Bhaskar Dasgupta, a corporate adviser who previously worked for the Abu Dhabi free zone. “We’re seeing more high-net-worth individuals moving from the BVI (British Virgin Islands), Caymans, Mauritius and Singapore to here.”Billionaire arrivals

SPVs, popularized by junk-bond king Michael Milken in the late 1980s, serve as separate legal entities and have become the preferred structures for high-net-worth individuals aiming to compartmentalize their financial risk.

Abu Dhabi positions its SPVs as holding companies managing wealth, with the flexibility to encompass diverse assets such as property and equity.

This influx of financial activity to the UAE signifies a new role for its US$509 billion (S$684 billion) economy as the ruling Al Nahyan family endeavors to diversify away from oil dependence.

Abu Dhabi's prosperity in this regard coincides with increased scrutiny faced by low-tax jurisdictions like the British Virgin Islands and the Cayman Islands from officials worldwide, leading to a decline in new corporate registrations.

Bhaskar Dasgupta, a corporate adviser with previous experience in the Abu Dhabi free zone, attests to ADGM's appeal, stating, "ADGM is a great place to set up SPVs, and it's increasing sharply. We're seeing more high-net-worth individuals moving from the BVI (British Virgin Islands), Caymans, Mauritius, and Singapore to here."

The emirate's attractiveness extends beyond its financial benefits, encompassing factors such as geopolitical stability, residency incentives, and the presence of sovereign wealth funds and influential private investment firms. Abu Dhabi's strategic positioning and comprehensive regulatory framework contribute to its success in luring more SPVs.

The allure of the Middle Eastern business hub lies in its ability to safeguard assets from foreign jurisdictions and leverage the UAE's double tax treaty network, as disclosed by individuals familiar with the matter.

The UAE's double tax treaty facilitates tax minimization for affluent individuals with companies housed within the SPV, contingent on agreements between the Gulf state and the additional countries where they conduct business.

Wealth advisers and international investors, who spoke anonymously, highlight several advantages offered by the emirate. Abu Dhabi and nearby Dubai have evolved into thriving global cities, offering long-term residency and, in some instances, UAE passports to those making substantial investments.

Additionally, Abu Dhabi boasts sovereign wealth funds overseeing assets exceeding US$1 trillion and influential private investment firms. The UAE, in recent years, has served as a haven for those navigating regulatory challenges overseas.

Prominent figures like Zhao, the former CEO of Binance, found Dubai appealing, citing its pro-crypto policies. Despite legal issues leading to guilty pleas for anti-money laundering and US sanctions violations in November, Zhao established multiple SPVs in Abu Dhabi in 2021, holding both UAE and Canadian citizenship.

The international financial free zone, inaugurated in 2015, has gained attractiveness due to the UAE refraining from sanctioning countries like Russia while Western nations increased restrictions.

Simultaneously, countries like Switzerland, Britain, and certain Caribbean nations have tightened scrutiny on individuals linked to countries facing sanctions.

Abu Dhabi's structures are gaining favor, even among the royals. Subsidiaries of Royal Group, controlled by National Security Adviser Sheikh Tahnoon bin Zayed Al Nahyan, the UAE President's brother and a prominent dealmaker, have established several ADGM SPVs in the latter half of this year, according to filings and insiders.

The success of Abu Dhabi in attracting more SPVs is attributed, in part, to the strategic utilization of its golden visa and passport programs over the past few years, fostering a trend of billionaires making the Gulf state their more permanent abode.

Armand Arton, founder of citizenship firm Arton Capital, notes this trend, emphasizing that as billionaires feel welcomed and secure, they increasingly consider relocating both their businesses and assets, with ADGM emerging as a preferred destination.