The UAE has always been an attractive destination for entrepreneurs, investors, and global citizens looking to build wealth. In the wake of the Ukrainian conflict, the country welcomed thousands of new high-net-worth individuals (HNWIs) looking for a safe haven to protect and build their wealth.
Dubai alone welcomed an additional 3,500 HNWIs in 2022, taking its total to 68,400 millionaires and 15 billionaires. It is now the wealthiest city in the MENA region and 20th in the world for the highest number of millionaires.
Soaring demand for luxury goods
This vast influx of wealth is great news for the economy of Dubai and the UAE, more broadly, sending sales of luxury goods skyrocketing and injecting capital into the financial markets and retail sectors. Indeed, the world’s largest Rolex boutique in Dubai Mall has a 4,000-strong waiting list.
Records show waiting lists for Rolls Royce and Bentley, with one dealership reporting a 10 per cent increase in high-end sales in 2022, while another saw a 6 per cent increase in demand for customized bespoke vehicles.
Analysis by Statista points towards a long-term trend that predated the European conflict, with the UAE accounting for more than 1 per cent of all global spending within the luxury space in 2021. This is despite the country only constituting 0.1 per cent of the global population.
It is suggested that the luxury market will grow by a compound annual growth rate (CAGR) of 6.82 per cent between 2022-27. This is good news for UAE retailers and the wider economy – but the growing prevalence of so many luxury goods owned by a highly mobile migrant population raises new questions about security and protection.
Asset protection
With experts suggesting that less than 3 per cent of HNWIs are properly protecting their assets through specialized insurance products for luxury goods, thousands of the UAE’s wealthiest people are leaving their assets at risk both at home and when they travel abroad. Few understand that it is possible to take out bespoke policies to protect everything from art to luxury watches, rare artifacts, luxury cars, collectibles such as stamps or coins, and high-end jewelry.
High-value item insurance is a crucial requirement for HNWIs, not only at home in the UAE, but also when they travel abroad to countries and cities with much higher rates of theft and burglary.
Soaring global crime
Of particular concern to HNWIs when traveling is an alarming rise in luxury watch theft in some of the world’s major cities. More than 6,000 luxury watches were stolen in London in 2022, according to London’s Metropolitan Police, with a total of 139 million pound worth of watches since 2018.
Nearly 600 watches were recorded stolen in December 2022 alone, with victims in expensive areas such as Knightsbridge, Kensington, Mayfair, and Westminster being run over by criminals on motorbikes or being held to ransom by thieves with knives and machetes.
Such crimes are not confined to the world’s major cities – they are also soaring within the kind of places that thousands of HNWIs flock to every summer, with cities such as Ibiza, Barcelona, Mallorca, Rome, and Madrid all recording major rises in the theft of luxury items. Police in Ibiza recorded the theft of a watch worth 1.2 million euro from an Azerbaijani tourist – a Richard Mille 50-03 McLaren F1 model that was one of only 75 in existence worldwide.
Closer to home
Back in the UAE, climate change is also taking its toll, with a growing incidence of annual floods damaging properties, furniture, and cars across the country. In 2022, a number of luxury car showrooms reported significant flood damage to luxury vehicles. In August 2022, unprecedented flash floods in the northern emirates caused widespread damage, killing seven people and injuring 870 who were rescued by emergency services. For owners of super-luxury cars and multi-million-dollar homes, specialist insurance has become a necessity.
Get a robust insurance strategy today
Despite the UAE’s prosperity and the luxury it affords, an alarming proportion of HNWIs remain underinsured, leaving their significant assets vulnerable. In a world marked by rising global crime and environmental risks, a robust insurance strategy becomes essential to safeguard wealth.
If you fall into this category, it’s time to reassess your risk profile. The safety of your wealth should be as much a priority as its accumulation. Protecting your wealth is not a luxury, it’s a necessity. Don’t let your valuable assets remain exposed to unforeseen circumstances.
The world is unpredictable; ensure your wealth isn’t. Don’t leave it to chance; act now.
