Dubai: The strong revival in regional equity markets and the rise of home grown wealth managers is driving a strong trend o f onshoring or booking assets within the GCC region.
According to Boston Consulting Group’s global wealth report 2013 Middle East and Africa region had a 32.1 per cent offshore share — down from 34.4 per cent in 2008. And, with the ongoing attractiveness of regional investment opportunities — compared to global opportunities — this figure is expected to continue to decrease to 31.6 per cent in 2018.
Cash and deposits comprised 60 per cent of MEA’s wealth in 2008, which dropped to 52 per cent in 2013 as equities grew in popularity. This trend is predicted to continue until 2018, with the wealth breakdown anticipated to be 48 per cent in cash and deposits, 20 per cent in bonds, and 32 per cent in equities.
Given the positive development of onshoring and the trend towards more equities, the GCC is back on the agenda of international wealth managers.
“We have observed a growing interest on behalf of international wealth managers to tap into the asset pool. However, to be successful, international wealth managers must adapt to local preferences or conditions and invest in building long-term relationships instead of short-term revenue maximisation,” said Markus Massi, Partner and Managing Director, the Boston Consulting Group.
On the back of continuous economic growth, driven by government investments, private wealth in the Middle East and Africa region increased by 11.6 per cent to reach $5.2 trillion in 2013. This increase is attributed to high saving rates and consistently strong nominal GDP growth in oil-rich countries such as Saudi Arabia (13.4 per cent), Kuwait (13.6 per cent) and the United Arab Emirates (12.8 per cent).
As in all other regions, equities were the strongest contributor to the regional wealth surge. The amount of wealth held in equities rose by 30.5 per cent across major MEA markets, compared to 6.4 per cent for bonds and 5.7 per cent for cash and deposits. With a projected CAGR of 6.5 per cent, private wealth in the region will reach an estimated $7.2 trillion by the end of 2018.
