Kuwait, Qatar, UAE ranked among wealthiest countries, says Boston Consulting Group
Saudi Arabia has more super-rich households worth more than $100m than anywhere else in the world, a study by Boston Consulting Group said Wednesday.
Qatar, Kuwait and the UAE also ranked among the ten nations with the highest density of ultra-high net worth individuals, the report said, showing wealth in the Asian region is growing at a rate unmatched elsewhere.
Overall wealth in the Middle East and North Africa grew 8.6 percent to $4.5 trillion in 2010, aiding by high oil prices, and is expected to reach $6.7 trillion by 2015, BCG said.
Saudi Arabia had the highest concentration of UHNW households, measured per 100,000 households, at 18, while Kuwait had eight, Qatar had six and the UAE had five.
“Given the demographics and overall wealth of these petroleum-rich countries we would expect a higher proportion of UHNW households than in other parts of the world,” said Dr Sven-Olaf Vathje, partner at BCG Middle East.
“Growth in assets under management also reflects the strong fundamentals of the region, driven by continuing strong petroleum prices.”
Globally, the ranks of millionaires swelled by 12 percent in 2010. Singapore led the field, with a 33 percent rise in its number of millionaires. The U.S. had the most $1m-plus households, with 5.2 million, followed by Japan and China.
Global assets under management rose by eight percent to $121.8 trillion in 2010, beating the study’s previous peak of $111.8 trillion in 2007
BCG said international and local banks are ramping up investment in the Gulf in a bid to capture a slice of the region’s growing wealth.
“You see a lot of banks in the UAE but also the other GCC countries that are investing actively into wealth management. It’s pretty clear why that’s the case [as] it’s a very stable source of revenue if you do it right,” said Markus Massi, partner at BCG Middle East.
“Many banks have seen their investment banking revenues and corporate banking revenues go through some roller coaster over the last couple of years so the desire to participate in this global business is very strong.”
Wealth managers are also targeting the women in the six Gulf states, who hold around 22 percent, or $0.7 trillion, of the region’s wealth.
Despite the vast wealth of Middle East investors, risk appetite remains far lower in this region compared to other parts of the world. Investors favour low risk investments, opting to hold 56 percent of assets under management in cash, compared to 13 percent in bond portfolios and 31 percent in equities.
“There is a lot of cautiousness about investing. This is not only this year, if you look back five and ten years, you will have seen a very similar picture,” said Massi.
Regional investors also favour sector, asset classes and geographies they have an affinity with. Oil and gas is the favoured sector to invest in followed by the industrial and manufacturing segment and education and healthcare.
Despite the significant declines in real estate prices over the last two years, it remains the most popular asset class followed by capital protected products and GCC equities.
The GCC, India and SEA/China are the preferred three countries to invest in, said BCG.