The Middle East was the second highest region in the world in terms of the growth in the number of high net worth individuals (HNWI), according to the the Merrill Lynch Capgemini World Wealth Report 2011. The report states that HNWIs in the region increased by 10.4 per cent with the total number reaching around 440,000.
“The trend in terms of the actual size of wealth for the group grew by 12.5 per cent in the region, second only to Africa,” said Tamer Rashad, head of Middle East, Merrill Lynch Wealth Management.
“The Middle East will continue to be among the top regions, maybe even the top region in terms of growth in size of individuals and their wealth this year,” he added.
The region is witnessing higher growth rates than Western economies, and with oil revenues expected to remain strong, the GDP is set to grow further, said Niall Husbands, regional head of Wealth Management, Retail Banking and Wealth Management, MENA at HSBC. “The multiplier effect on the economy will lead to growth in high net individual households,” he said.
“Moreover, after the recent political situation, we believe that political stability will return to the region and a significant growth in infrastructure spending, private consumption and trade revenues will result in significant increase in household wealth,” he added.
This region is still growing fast, especially during a time when it’s quite rare to find growth, agreed Philippe Boutron, the regional chief investment officer of Societe Generale Private Banking Middle East. “It was impacted after the crisis, but we see it resuming- it’s a good trend now,” he said.
“I think the Middle East is a growth market but has characteristics of a mature market as well in that the wealth that’s being created, has been created over the last 50 years and is starting to pass from one generation to another. There is not a lot of brand new wealth creation like you see in a country like Russia or Turkey,” said Paolo Moscovici, managing director and head of JP Morgan Private Bank Middle East and Emerging Markets.
“But there is some healthy growth in the companies that our clients run. We see that despite the financial crisis, margins remain strong.”
By 2013, it is expected that there will be over two million wealthy individuals in the GCC alone, according to a report from Ernst and Young.
Within the Gulf region, in terms of assets, Saudi Arabia has the maximum number of wealthy individuals, followed by the UAE, Kuwait, Qatar, Oman and Bahrain, said Husbands.
See the Gulf Business March issue for a special six-page report on where the region’s rich are investing their wealth.