Dubai: High net-worth individuals (HNWI) from the region are optimistic on both the regional and global economic outlook, according to the GCC Wealth Insight Report, a survey-based study by Emirates Investment Bank (EIBank), that provides intelligence on the collective economic and investment outlook of the region’s wealthy.
The report, in its fifth year of publication, is based on a survey of 107 HNWIs with $2 million (Dh7.34 million) or more in investable assets.
Almost two-thirds of HNWIs included in the survey believe the current global and regional economy is improving or staying the same, attributing their optimism to the perceived recovery from previous economic crises and increased political stability.
HNWIs in the GCC also expect the positive global and regional economic trajectory to continue over the next five years.
“Last year [2017] was certainly a surprising year. The global economy’s strong performance has given HNWIs in the GCC a greater sense of optimism, both in the global and the GCC economy. Factors like the GCC’s stability, attractive investment opportunities and the low-tax environment are seen as the main drivers behind the growing confidence in the region’s economy, and the increased preference for investing in Gulf assets,” said Khaled Sifri, CEO of Emirates Investment Bank.
Positive economic sentiment in the GCC region has coincided with an uptick in preference for keeping assets closer to home and investing in GCC assets.
Cautious approach
Alongside the optimism and positive outlook seen in this year’s survey, the 2018 Report indicates that HNWIs are still somewhat cautious about the uncertainty in the economic and political environments. This is evident in the increase in HNWIs concerned with preserving wealth, as over a third say their priority now is to preserve wealth rather than pursuing a strategy of growing wealth, a notable increase from 2017. The percentage of those focused on growing their wealth has dropped to less than two-thirds of respondents, bringing wealth accumulation to a five-year low.
The distribution of HNWIs’ wealth is broadly similar to previous years, with investing in their own business remaining the top choice. However, there does appear to be an uptick in allocation to real estate and a slight shift away from cash in comparison to last year.
HNWIs in the GCC are more positive about the condition of the global economic situation in 2018 than they have been in the last two years. Respondents were evenly split with a third believing the global economic situation is improving, another third thinking it will remain the same, while a third sharing a view that it is worsening in 2018.
HNWIs in the UAE remains amongst the most positive, despite a decline in positivity from 2017. Despite some improvement in HNWI views in Saudi Arabia, Oman, Bahrain, and Qatar in comparison to 2017, around half of the respondents in Saudi Arabia and Kuwait believe the situation is worsening in 2018.
Current oil prices and upcoming high-profile events, such as Expo 2020 Dubai, were stated as reasons for optimism, whilst the economic impact of regional conflict is still creating a concern.
For the Gulf region, three in four HNWIs say that they are optimistic about the economic prospects over the next five years — slightly down compared to previous years. Nevertheless, the proportion of HNWIs who say that they are ‘very’ optimistic about prospects for the Gulf region shows a significant improvement over last year.
