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Why the GCC Is Emerging as a Global Private Markets Hotspot

Private capital is on the rise in the GCC. Backed by economic strength and new reforms, the region is becoming an increasingly attractive private markets hub. In this article, we take a closer look at trends across private equity, private debt, real estate, and infrastructure.

05 June 2025

Roland Fohn

Managing Director, Head of International Private Equity and Private Credit

Private Markets – A Key Contributor to Financing the GCC Region’s Growth

Over the last few decades, the main economies of the Gulf Cooperation Council (GCC) – encompassing Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain, and Oman – have been undergoing a significant process of liberalisation aimed at diversifying away from traditional oil and gas revenues. As a result, the region is attracting foreign investment and undergoing further integration into the global economy. The “Vision” projects launched across the region represent an essential component of this initiative. (See GCC: Region in Bloom for a deeper dive into our GCC outlook.)

Historically, key financing sources of economic activity have been dominated by government spending, sovereign wealth funds (SWFs), and public capital markets. Looking ahead, however, we believe private capital will play an increasing role in the region, where the three main economies (Saudi Arabia, UAE and Qatar) are projected to grow at approximately 4% per annum over the next four years, more than 2.4x the rate of advanced economies.

With the availability of robust market data still in a developmental phase, we offer insights derived mainly from our observations of local dynamics in covering trends across Private Equity, Private Debt, Infrastructure, and Real Estate.

Private Equity – Moving On From Past Challenges

Private equity (“PE”, including venture capital, “VC”) represents the majority of assets under management in the region. Despite historical governance and transparency issues, such as the Abraaj controversy and a recent slowdown in deal flow, the asset class continues to be a focus for investors, driven mainly by an increase in VC activity.

SWFs have played a significant role in supporting this growth by seeding local managers, knowledge sharing, and encouraging foreign investor participation. Consequently, PE is permeating most economic sectors. A growing entrepreneurial class has spearheaded the VC space and the emergence of attractive businesses in technology, life science, media, and online platforms.

In addition, governments have continued to improve local investment ecosystems as part of a broader drive to encourage foreign direct investment: for example, the International Financial Centres of the UAE (ADGM and DIFC) now offer independent regulatory and English common law frameworks. Saudi Arabia has also implemented favourable measures such as the New Investment Law, aimed at creating a more attractive and more level playing field for foreign investors, and numerous other initiatives to improve capital markets.

In terms of exit opportunities for private market investors (that is, to sell and realise a return), a maturing IPO market for taking companies public is complementing more traditional routes, such as sales to strategic and financial investors.

Real Estate – Strong Tailwinds

Capital for Real Estate investments has been predominantly provided by SWFs, family offices/high net worth individuals and pension funds. However, the increasing maturity and growth prospects of this market coupled with favourable ecosystem initiatives described above are attracting an increasing number of foreign institutional investors.

Residential is experiencing high demand, driven by population growth, urbanization, and government initiatives to promote home ownership. Office is benefiting from increased business activity, robust conditions in prime locations, and a limited work- from-home culture. Other sectors such as industrial/logistics, tourism and data centres are also experiencing strong tailwinds.

Infrastructure – A Critical Component of the “Vision” Projects

Governments, SWFs, and pension funds have historically been the primary source of capital in this space. However, private sector participation is strongly encouraged, especially given the immense scale of the “Vision” projects across the region and efforts to avoid over-stretching public finances. Public Private Partnerships (PPPs) have been actively promoted to accelerate this trend.

This has created a significant number of investment opportunities across a wide range of sectors (renewable energy, transportation, utilities, digital infrastructure) and is increasingly attracting global and regional infrastructure funds.

Private Credit – Addressing the Mid-market Funding Gap

This relatively new asset class has grown significantly over the last few years.

Debt financing in the region has traditionally been provided by local banks and has mainly catered to large corporate and project financing needs.

The continued growth and diversification of local economies has led to an increased number of mid-sized companies with financing needs that are either too small or too complex for banks. This funding gap, estimated at $250B (source: Janus Henderson), is expected to be partially addressed by a growing list of local and international private debt funds.

Financing structures range from traditional senior secured debt to tailored solutions such as structured equity, including Sharia-compliant structures when required by investors.

Attractive target returns, lender-friendly terms, positive (albeit not very long) track records and favourable regulatory and legal ecosystems (including improved bankruptcy regimes) are helping to support ongoing fundraising efforts. Several global players have recently acquired local teams and fund managers; this will likely facilitate the transfer of best practices to the region, further institutionalising this asset class and increasing its appeal to foreign investors.

The Bottom Line

We believe that private markets in the region will likely benefit from strong macro-economic fundamentals, increasingly attractive legal/regulatory frameworks and therefore could form an attractive component of a well balanced global portfolio of private assets.

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