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The United Arab Emirates (UAE) ranks twelfth in the world by proportion of millionaire households, with 3.3 percent – 33 out of every 1,000 households – holding private wealth of at least $1 million, according to The Boston Consulting Group’s (BCG) fourteenth annual global wealth management report.
Saudi Arabia is the GCC country with the highest share of assets in 2013, with 51 percent of households falling within the $5-100 million band, and 7 percent in the band with >$100 million. In parallel, the UAE had 51 percent and 5 percent respectively within the same categories; Kuwait had 39 percent and 3 percent.
In Riding A Wave of Growth: Global Wealth 2014, its fourteenth annual study of the global wealth-management industry, BCG addresses the current size of the market, the performance levels of leading institutions, and the state of offshore banking. It also provides a thorough analysis of key trends shaping the business landscape – including the growing importance of digital technology and the pursuit of optimal business models. Finally, the report offers clear action steps that players should take in their quest to build on the industry’s solid performance in 2013.
On a regional level, the report reveals that private financial wealth grew by 11.6 percent to reach $5.2 trillion in 2013. Key drivers were generally high saving rates and continued strong nominal GDP growth in oil-rich countries, such as Saudi Arabia (13.4 percent), Kuwait (13.6 percent) and the UAE (12.8 percent).
Qatar ranks first in the world with the highest density of millionaires, with 17.5 percent holding private wealth of at least $1 million. Kuwait is fifth with 9 percent, while Bahrain (5.9 percent) secured the sixth place. Oman and Saudi Arabia rank tenth and thirteenth, respectively.
Qatar also ranks sixth globally by ultra-high-net-worth (UHNW) households, defined as households with more than $100 million in private wealth. Kuwait, in turn, is in seventh place while Bahrain holds the sixteenth spot.
“As in all other regions, equities were the strongest contributor,” said Markus Massi, Partner and Managing Director, The Boston Consulting Group. “The amount of wealth held in equities rose by 30.5 percent across major MEA markets, compared with 6.4 percent for bonds and 5.7 percent for cash and deposits. With a projected CAGR of 6.5 percent, private wealth in the region will reach an estimated 7.2 trillion by the end of 2018, approximately a 3.6 percent share of total global wealth.”
Moreover, the study found that MEA, in 2013, had a 32.1 percent offshore share – down from 34.4 percent in 2008. And, with the ongoing attractiveness of regional investment opportunities – compared to global opportunities – this figure is expected to continue to decrease to 31.6 percent in 2018, with Saudi Arabia holding $1.4 trillion of the overall anticipated $7.2 trillion wealth.
Cash and deposits comprised 60 percent of MEA’s wealth in 2008, which dropped to 52 percent in 2013 as equities grew in popularity. This trend is predicted to continue until 2018, with the wealth breakdown anticipated to be 48 percent in cash and deposits, 20 percent in bonds, and 32 percent in equities.
Given the positive development of onshoring and the trend towards more equities, the GCC is back on the agenda of international wealth managers. “We have observed a growing interest on behalf of international wealth managers to tap into the asset pool,” explained Massi. “However, to be successful, international wealth managers must adapt to local preferences or conditions and invest in building long-term relationships instead of short-term revenue maximization.”
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