UAE’s ‘ultra rich’ to see 20% rise in wealth over five years

Private wealth held by the United Arab Emirates’ wealthy elite is expected to hit $1 trillion by 2020, a new report has found.

The country’s upper echelons – households with more than $100m – can expect to see their nests increase by 20 per cent, while those with at least $20m can see a similar increase with 18 per cent.

Meanwhile, millionaires with private wealth reaching between $1m and $20m saw funds increase by nearly 14 per cent last year, which will rise to 16.5 per cent over the next five years.

However, the number of millionaire households in the UAE is projected to rise at a slower rate of 8 per cent by 2020, despite a slightly higher increase of 8.5 per cent in 2015.

Across the Middle East, wealth is expected to hit $11.8 trillion by 2020, with oil-rich nations of the UAE, Kuwait and Saudi Arabia accounting for nearly a quarter of that sum.

According Boston Consulting Group’s Global Wealth Report 2016, the growth in private wealth was driven primarily by cash and deposits over the previous two years, increasing by 17 per cent, while bonds and equities rose by just 0.7 per cent and 3.8 per cent respectively.

However, equities still accounts for the majority of the breakdown, standing at 20 per cent, while cash and deposits accounts for 12 per cent.

BCG Middle East’s Financial Services managing director Markus Massi said: “Segmentation approaches based mainly on wealth level continue to be used by the majority of wealth managers, neglect what clients are truly willing to pay for.

“Such approaches no longer allow wealth managers to capitalize on the full potential of the market. Local asset managers still provide a standard product program with limited differentiation. International asset managers have embarked on a journey designed to tailor their offering around specific customer segments, leveraging increasingly digital opportunities.

“They use technology to offer additional communication channels and services to their customers and tap into big data to generate customer insights—so they can further customize their offering and make it more personal. Local wealth managers in the GCC are only now starting to recognise this opportunity, which could become a source of true differentiation.”