UAE's financial wealth to reach $1.3 trillion by 2027

The UAE’s financial wealth is anticipated to see a robust compound annual growth rate (CAGR) of 5.5 per cent in new wealth, rising from $1 trillion to $1.3 trillion from 2022 to 2027, according to a new report by Boston Consulting Group (BCG).

The report, titled ‘Global Wealth Report 2023: Resetting the Course’, reveals that equities and investment funds in the UAE continue to make up the largest asset class at 58% of total personal wealth in 2022, while bonds are expected to grow the fastest with a CAGR of 8.4% during 2022-2027.

UAE represented 13.2% of the Middle East and Africa's financial wealth in 2022, growing at a rate of 6.5% per annum from 2017 to reach $1 trillion in 2022.

In 2022, a sizeable portion of the UAE's financial wealth, approximately 25%, originated from Ultra High Net Worth (UHNW) individuals worth more than $100 million each. The influence of these individuals is anticipated to continue to remain consistent until 2027.

Furthermore, individuals with wealth between $1 million and $20 million held 32% of the UAE's wealth in 2022. This figure is expected to grow to 34% in 2027.

The report also presents notable findings on the UAE's real assets and liabilities. Real assets in the UAE grew by 7.5% per year from 2017 to 2022, reaching $1.9 trillion, and are projected to increase by 6.9% per annum to $2.6 trillion by 2027.

Simultaneously, the UAE's liabilities sector expanded by 3.1% per annum during the same period and is expected to grow by 6.3% per annum to $0.2 trillion by 2027.

The report also outlines eight initiatives on both the revenue and cost sides that can aid firms in positioning themselves optimally for the future. The aim is to provide actionable information and insights for wealth managers looking for a competitive advantage amidst a challenging marketplace and tough overall economic conditions.

On the revenue side, the strategies include scalable client acquisition, distinctive private-market offerings, revising product shelves towards fixed-income products, and incorporating generative artificial intelligence (GenAI) in financial advice.

For cost reduction, the focus is on end-to-end (E2E) process review, making informed shoring decisions, utilizing third-party tech and operational solutions, and simplifying products and services via advice-like discretionary portfolio management (DPM) to streamline operations and cater to various client needs effectively.