Business | Economy

UAE on global ultra-wealthy household list

BCG report shows assets under management in Middle East and Africa rose by 8.6% to $4.5tr in 2010

  • By Babu Das Augustine, Deputy Business Editor
  • Published: 00:00 June 2, 2011
  • Gulf News

  • Image Credit: By Hadrian Hernandez/Gulf News
  • Within the region, Dubai sustains its position as most prominent offshore centre in the Arab world.
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Dubai: Saudi Arabia, Kuwait, Qatar and the UAE were named four of the top 10 countries in the world with the highest density of ultra-wealthy households, according to Boston Consulting Group's (BCG) latest annual Global Wealth Report.

According to the study, ‘ultra-high-net-worth' households, defined as those with more than $100 million (Dh367 million) in assets under management, were most highly concentrated in Saudi Arabia with 18 per 100,000 households.

This was followed by Switzerland (10), Hong Kong (9), Kuwait (8), Austria (8), Norway (7), Qatar (6), Denmark (5), Singapore (5) and the UAE (5).

Qatar, Kuwait and the UAE also made it to the top 10 in terms of the highest proportion of millionaire households with 8.9 per cent, 8.5 per cent and 2.6 per cent, respectively.

The Middle East and Africa showed significant growth in wealth as assets under management rose 8.6 per cent to $4.5 trillion in 2010 with the BCG projecting it will reach $6.7 trillion by 2015.

Growth

"Growth in assets under management in the region reflects the strong fundamentals of the region, driven by continuing strong petroleum prices," said Dr. Sven-Olaf Vathje, Partner and Managing Director at BCG Middle East.

Regional trends in wealth management showed a very high proportion of cash and deposits, low share of bonds and very few managed funds in Middle Eastern household portfolios.

While 56 per cent of Gulf Cooperation Council (GCC) investors preferred to keep their investment in cash or very short term investments like bank deposits, 31 per cent preferred to invest in regional or home equity markets with 13 per cent opting to invest in bonds. "The trend clearly shows the risk appetite of regional investors remains low, especially when compared to levels seen before the downturn.

"The asset allocation of GCC high net worth individuals remains overweight in cash and capital-protected products," said Vathje.

In the Gulf countries wealthy households controlled a majority of wealth with Saudi households controlling 81 per cent of private wealth in the country followed by Kuwaiti households with 68 per cent, Qatar 65 per cent and the UAE 63 per cent.

For the Middle East as a whole, the study observed that women controlled about $500 billion or 22 per cent of the private wealth in the region.

Offshore wealth (assets booked in a country where the investor has no legal residence or tax domicile) from the Middle East and Africa reached $1.4 trillion, with the major proportion held in the UK, Channel Islands, Dublin and Switzerland.

Prominent centres

Within the region, Dubai sustains its position as most prominent offshore centre in the Arab world, with Saudi Arabia, Turkey, Iran, Kuwait and Russia emerging as the most important origins of offshore wealth in the region.

BCG analysts said the recent political turmoil has reversed the trend towards "onshoring" wealth in some countries in the Middle East but it did not have any adverse impact on household wealth in the Gulf countries.

"For the more stable Gulf states the onshoring trend continues. Some Gulf jurisdictions, for example, Dubai, are now attracting more wealth from other Middle East countries as they act as offshore centres themselves," said Markus Massi, Partner & Managing Director at BCG Middle East.

Meanwhile, the Boston Consulting Group's latest annual Global Wealth report shows global wealth climbed to $121.8 trillion last year, about $20 trillion above the depths of the financial crisis in 2009.

Propelled by growth in nearly every region, global wealth continued a solid recovery in 2010, increasing by 8 per cent, or $9 trillion.

"The sustained recovery of global wealth reaffirms wealth management's place as a relatively stable and attractive part of the financial services world," said Dr. Sven-Olaf Vathje.

"The recovery also points towards improving investor confidence across the world."

While millionaire households represent 39 per cent of global wealth, the US led the list with the largest number of ultra high networth households followed by Japan, China, the UK and Germany.

North America had the largest absolute gain of any regional wealth market in assets under management at $3.6 trillion, and the second-highest growth rate, at 10.2 per cent. Its $38.2 trillion in assets under management made it the world's richest region, with nearly one-third of global wealth. In Europe, wealth grew at a below-average rate of 4.8 per cent, but the region still had a gain of $1.7 trillion in assets under management.

The growth rate was slowed by the euro's slide relative to the US dollar in 2010. Wealth grew fastest in Asia-Pacific (excluding Japan), at 17.1 per cent. In the Middle East and Africa, growth was somewhat above the global average, at 8.6 per cent. In Latin America, wealth grew by 8.2 per cent.

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