eFinancialCareers

Dubai could soon be hit by a wave of hedge fund managers fleeing the UK.

Proposals for increasing the amount of tax that wealthy non-domicile residents pay in the UK are threatening London’s position as the financial centre top spot. If it goes ahead, hedge fund managers could be on the first plane out of there. Dubai is tipped to benefit.

A staggering 84% of respondents to a survey of 100 hedge funds by tax firm Phoros said they would leave the UK if the proposals go ahead. Switzerland was cited as the prime location to move to, followed by Dubai and Hong Kong.

Duncan Webster, director of Phoros, says: “There is no doubt that if these proposals are introduced, their impact on the City of London, and in particular its reputation as a centre of excellence for private equity and hedge fund managers, will be catastrophic.”

This comes as Bahrain has revamped investment laws to give hedge funds easy access to the country. Abdul Rahman Al Baker, executive director of the Central Bank of Bahrain, says he expects the number of hedge funds in the region to increase by 10% this year.

However, Mark Yeandle, author of the Global Financial Centre Index by consultancy Z/Yen, says: “Dubai has the right market access, the right infrastructure and they’ve got the right costs for businesses to set up there. But if you’re a hedge fund manager currently used to the richness of culture in a lot of the big Western centres, it’s going to take a big step to jump ship and move to Dubai,” he warns.

But the non-dom incentive might not be needed to sway hedge funds across to the Middle East. According to Gulf News, attendees at the ninth annual Hedge Funds World Conference in Dubai predicted an unprecedented boom in the GCC hedge funds sector this year.

And Peter O’Connell, director of recruiters CuttingHedge, reckons hedge funds are already looking to move into the Middle East: “We are witnessing hedge funds seizing the opportunity to increase distribution and develop and focus on new and emerging markets. Funds are placing the emphasis on securing talent with on-the-ground experience and contacts within their desired new markets, like the Middle East.”

Hedge fund managers already out in the region can enjoy good earnings. Recruiters reckon salaries for money managers have shot up in the last year or so to around $350k-$450k, plus bonus.