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Middle East emerges as global magnet for private capital investment
Sovereign wealth funds, family offices and infrastructure spending are reshaping regional capital flows, with Saudi Arabia and the UAE attracting growing private equity, venture capital and technology investments
- PUBLISHED: Tue 22 Sept 2026, 11:30 AM UPDATED: Tue 22 Sept 2026, 1:45 PM
The Middle East is rapidly transforming from a source of global investment capital into a destination for private capital deployment, driven by sovereign wealth funds (SWFs), family offices, infrastructure investments and deepening domestic capital markets, according to a new report by BlackRock and Preqin.
The report, Market Evolution: The Middle East from Capital Source to Capital Destination, argues that structural economic reforms, expanding private markets and growing investor sophistication are helping reposition the region in global capital markets. Saudi Arabia and the UAE have emerged as the key beneficiaries of this shift, attracting investment across private equity, venture capital, infrastructure and technology sectors.
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The data highlights the growing importance of private markets in regional portfolios. Middle East SWFs tracked by Preqin allocate 43.2 per cent of their exposure to private capital, compared with 35 per cent for global peers outside Africa. Investor appetite is also strengthening, with 83 per cent of regional limited partners (LPs) positive on or considering future private equity mandates in 2026, up from 70 per cent in 2019.
More than half of respondents to Preqin’s latest Middle East Investor Survey expect to increase allocations to private equity over the next year, while half plan to commit more capital to infrastructure. More than 70 per cent said government support would encourage even greater investment. Saudi Arabia and the UAE were identified among the most attractive markets for future capital deployment.
According to Ayman Daif, Managing Director and Head of Aladdin Business Development for the Middle East, Central Asia, Africa and India at BlackRock, investor priorities are increasingly focused on resilience across entire portfolios rather than individual asset classes. “Private markets are no longer a satellite allocation; they have become part of the core toolkit for portfolio resilience,” he said, noting that investors are increasingly assessing liquidity, risk and return across both public and private assets through a “whole-portfolio” approach.
The shift is also being driven by expanding local investment opportunities. Mohammad AlFahim, Managing Director and UAE Country Head at BlackRock, said the region now offers a much broader range of institutional-quality investments than in the past.
“There are far more investment opportunities at home – across infrastructure, pipelines, data centers, and the like – large, quality assets that attract the biggest institutional investors globally,” AlFahim said.
He added that the region’s increasingly sophisticated institutional landscape remains underestimated internationally. “People focus on the scale of capital in the Middle East, but the bigger story is the evolution of the institutions themselves.”
Investment activity is increasingly moving closer to home. The report points to a narrowing gap between domestic and overseas private equity and venture capital investments by Middle East-based investors. In Saudi Arabia, domestic private capital activity has nearly doubled since 2020, while the Public Investment Fund has accelerated direct deal-making in the region, overtaking its investment activity outside the Middle East in 2023.
Fundraising trends further underline the region’s growing significance. Of the 590 Middle East-based funds closed since 2015, Saudi Arabia accounted for 359, representing around 61 per cent of the total, while the UAE accounted for 143 funds. Regional fundraising reached $4.5 billion in 2025, with private equity emerging as the dominant asset class after raising $7 billion in 2024 and $4.5 billion so far in 2026.
Meanwhile, family offices have become a major force in regional private markets. They now account for nearly half of active Middle East-based private capital investors, with private equity representing their preferred asset class.
Ali AlQadhi, Managing Director and CEO of BlackRock Kuwait and Qatar, said the region’s role in global finance has fundamentally changed. “The Middle East used to be a place capital flowed out of. Today, it’s where that capital is being put to work – a destination for investment in its own right,” he said.
He identified infrastructure and data centres as key growth themes, arguing that abundant land, competitive energy costs and government support position the region to capture increasing global investment linked to artificial intelligence and digital infrastructure.
The report concludes that while sovereign wealth funds continue to provide scale and market leadership, the growing participation of family offices, private investors and international fund managers is helping create a more diversified and mature investment ecosystem. The result is a region that is no longer simply exporting capital, but increasingly attracting and deploying it at home.
Associate Editor Somshankar Bandyopadhyay brings more than three decades of experience to the KT newsroom. Currently, he manages the news production of the business section, ensuring that the top economic and business news of the day reaches its readers.