DUBAI 19 June 2017: The growth of private wealth in the UAE witnessed a significant 8.3 per cent increase in 2016, leading the Gulf Cooperation Council, GCC, countries, according to a new report by The Boston Consulting Group (BCG).
The overall growth of wealth in the UAE is projected at 7.4 per cent over the next five years, to reach US$0.8 trillion. Cash deposits, at a 5.5 per cent compounded annual growth rate (CAGR), and bonds, at 3.6 per cent CAGR, will be the primary contributors to this increase over the next five years, according to the ‘Global Wealth 2017: Transforming the Client Experience,’ released earlier this month.
Equity Led
In the UAE, the growth of private wealth was driven primarily by equities. In 2016, the amount of wealth held in equities increased by 9.3 per cent, in comparison to cash and deposits at 8.4 per cent and bonds at 3.8 per cent.
Taking an in-depth look at the distribution and private wealth held by ultra-high-net-worth households (above $100 million) in the UAE, wealth grew significantly by 8.8 percent in 2016. Steady growth is expected to continue through 2021, with private wealth held by this segment growing at a CAGR of 9.4 percent.
This 17th annual study by BCG outlines the evolution of private wealth from both global and regional perspectives, addresses key industry trends, and places special emphasis on how players can create fresh and innovative client journeys by leveraging digital technology to its fullest in wealth management business and operating models.
Mena with $12 trillion
Over the next five years, wealth in the Middle East and Africa region is set to reach $12 trillion, while the UAE, Oman, Qatar, and Saudi Arabia’s contribution will account for 21.1 percent.
The upper high-net-worth segment (between $20 million and $100 million) experienced the strongest growth in 2016 at 11.2 percent. In the next five years, the projected growth of this segment will see a slight slowdown to 9.9 percent CAGR.
In the UAE, private wealth held by the lower high-net-worth segment (between $1 million and $20 million) witnessed a steady growth of 10.5 percent in 2016. Private wealth in this segment has a projected CAGR of 8.8 percent over the next five years. The segment is also expected to experience a slight slowdown in growth in the next five years.
The findings of BCG’s report also revealed that, in 2016, Switzerland remained the largest destination for the Middle East and Africa’s offshore wealth, accounting for 31 percent with a projected CAGR of 4.7 percent over the next five years. This was followed by the UK/Channel Islands at 23 percent with a CAGR of five percent, and Dubai at 18 percent with a CAGR of 4.5 percent.
By Rajive Singh