How to get rich: Where UAE millionaires keep their money
Do you wonder how millionaires get richer? Here's how they invest their money in order to expand their fortunes
Dubai: There’s no magic formula for getting rich, and unless you get lucky in a lottery draw, it usually takes a lot of hard work to make $1 million.
But what do the fortunate ones do once they join the high-net-worth club? For one, they don’t keep their piles of cash under the mattress or let their fortunes sit idly in a bank account.
A recent study by New World Wealth, a company that tracks millionaires and billionaires, has offered some insights into how the UAE’s super wealthy invest or allocate their money in order to get richer.
Over the past two decades, the UAE has seen the population of the super rich increased significantly and as of the latest count, at least 88,700 millionaires now call the UAE home. These individuals are so rich that their combined net assets, estimated to be $470 billion, account for more than half (51 per cent) of the total private wealth held in UAE.
However, the study found that the country’s super rich, each with net assets of at least $1 million (Dh3.6 million) don’t put the bulk of their money within easy reach.
Instead, they keep these fortunes somewhere else, either by investing in a company or buying second homes in popular destinations like New York or London, or acquiring stocks, gold and other commodities.
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Based on their interviews with wealth managers and fund managers, New World Wealth found that millionaires keep the biggest proportion of their wealth (26 per cent) in non-liquid assets, such as business interests.
Also a significant amount, equivalent to 24 per cent of what they own, are placed in equities, followed by apartments, villas or properties (23 per cent).
Only a very small amount, about 16 per cent, are actually kept in cash or bank accounts, as well as in alternative investments (11 per cent), which include commodities private equity products and structured products and collectables.
Wealthiest places in UAE
Dubai
Number of multi-millionaires: 2,590
Number of billionaires: 10
Total wealth held: $550 billion
Abu Dhabi
Number of millionaires: 19,200
Number of multi-millionaires: 910
Number of billionaires: 3
Total wealth held: $151 billion
Data from Dubai Land Department showed that wealthy people do have a high interest in real estate investing. And among the foreigners who are attracted to Dubai realty, buyers who are originally from India appear to have spent the largest amount of money, pouring a total of Dh5.9 billion into Dubai real estate during the first half of the year.
Overall, Emirati nationals continued to top the table, snatching up properties worth Dh6.8 billion, followed by those who are from Saudi Arabia, with property purchases amounting to Dh3.7 billion.
A number of millionaires based in the UAE also move their fortunes to other markets, in order to maximise their returns. At the end of 2017, more than a third (38 per cent) of the wealth held by UAE millionaires were invested in foreign assets.
“This percentage is well above the worldwide average of around 24 per cent, which reflects that fact that many wealthy individuals use the UAE as base for managing their businesses and investments around the world (similar to people living in Singapore and Hong Kong),” New World Wealth noted.
They funds taken out of the UAE are mainly held in foreign businesses, as well as in foreign cash and American, European and Asian stocks.
A significant number (60 per cent) of these millionaires have also invested their money in second homes abroad, such as in London, New York, Paris, Mumbai and Istanbul.
But in terms of which industries in which millionaires have acquired their wealth, at least three sectors have stood out and on top of the list is the financial and professional services sector, which includes banks, law firms, consulting firms, fund managers and wealth managers, followed by oil and gas and basic materials, and real estate and construction.
The main industries in which UAE millionaires have acquired their wealth:
Sector/ % of HNWIs, as of 2017
Financial and professionals services: 18%
Oil and basic materials: 15%
Real estate and construction: 10%
Diversified: 9%
Transport and logistics: 8%
Tech and telecoms: 7%
Healthcare: 7%
Hotels and leisure: 6%
Retail and fashion: 6%
Other: 5%
Manufacturing: 4%
FMCG: 3%
Media: 2%
As of March 2018, seven billionaires from the UAE made it to the annual ranking of the richest people on earth by Forbes.
A closer look at the sources of wealth of these individuals would also reveal that putting eggs in one basket isn’t a popular strategy among the rich, and that property figures prominently in their portfolio.
The list below offers a snapshot of the source of fortunes of billionaires in the UAE.
1.Abdulla bin Ahmad Al Ghurair & family
Net worth in 2018: $5.9 billion
Net worth in 2017: $6.8 billion
Source: Diversified (Al Ghurair’s holding company has interests in food, construction and real estate, according to Forbes.)
Last year’s rank in UAE: #2
Current global rank: #296
2.Majid Al Futtaim & family
Net worth in 2018: $4.6 billion
Net worth in 2017: $10.6 billion
Source: Real estate, retail (The businessman’s company owns and operates 12 hotels and 21 malls, which include Mall of the Emirates, Deira City Centre and Mall of Egypt.)
Last year’s rank in UAE: #1
Current global rank: #456
3. Hussain Sajwani
Net worth in 2018: $4.1 billion
Net worth in 2017: $3.7 billion
Source: Real estate
Last year’s rank in UAE: #4
Current global rank: #527
4. Abdulla Al Futtaim
Net worth in 2018: $3.3 billion
Net worth in 2017: $4.1 billion
Source: Auto dealership, investments
Last year’s rank in UAE: #3
Current global rank: #703
5.Saeed Bin Butti Al Qubaisi
Net worth in 2018: $2.7 billion
Net worth in 2017: Unknown
Source: Hospitals, investments
Current global rank: #887
6. Saif Al Ghurair & family
Net worth in 2018: $1.9 billion
Net worth in 2017: $2.1 billion
Source: Diversified
Last year’s rank in UAE: #5
Current global rank: #1,284
7. Khalifa Bin Butti Al Muhairi
Net worth in 2018: $1.5 billion
Net worth in 2017: Unknown
Source: Hospitals, investments
Current global rank: #1,561