UAE private wealth forecast to grow to $590bn by 2022

Boston Consulting Group said UAE private wealth grew 8% between 2016-17, set to remain steady over next five years
UAE private wealth forecast to grow to $590bn by 2022
The Boston Consulting Group (BCG) said personal wealth in the UAE is projected to continue to grow at a compound annual growth rate (CAGR) of 8 percent and expected to reach $590 billion in investable assets by 2022. Photo by Dan KitwoodGetty Images
By Sam Bridge
Wed 25 Jul 2018 06:53 AM

Private wealth in the UAE saw positive growth between 2016 and 2017 of 8 percent, and this growth is projected to remain steady over the next five years, according to a new report.

The Boston Consulting Group (BCG) said personal wealth in the UAE is projected to continue to grow at a compound annual growth rate (CAGR) of 8 percent and expected to reach $590 billion in investable assets by 2022.

The report said growth in the UAE grew slower than globally (12 percent) as worldwide personal wealth reached nearly $202 trillion.

According to the report, the main drivers were the bull market environment in all major economies - with wealth in equities and investment funds showing by far the strongest growth - and the significant strengthening of most major currencies against the dollar.

It said UAE non-investible assets are expected to increase at an annual rate of 11 percent in the next five years, while investible wealth growth is projected to remain constant at a rate of 7 percent.

When it comes to asset allocation, currency and deposits, at 46 percent, were the highest proportion of assets in the UAE in 2017, followed by offshore assets at 30 percent, life insurance and pensions at 15 percent and equities and investment funds at 9 percent.

It added that for the most part, this asset allocation is expected to experience slight growth by 2022, with currency and deposits, life insurance and pensions, and equities and investment funds projected to reach 48 percent, 17 percent and 11 percent respectively.

BCG noted that as the regulatory climate has tightened over the last decade, there have been significant flows back onshore. In the UAE, this is signified by the expected decrease in offshore assets of 6 percent between 2017 and 2022.

At 15 percent, equities and investment funds drove growth by asset class between 2016 and 2017 in the UAE. Other drivers of asset class growth included currency and deposits at 11 percent, life insurance and pensions at 10 percent, and offshore at 2 percent.

Looking to the future, the report said that growth by asset class will experience a slightly slower, but steady growth in equities and investment funds at rate of 12 percent, and currency and deposits by 9 percent over the next five years.

In the same period, other asset classes will experience a slight increase including life insurance and pensions, offshore, and bonds.

While offshore share is expected to decline over the next five years from 30 percent in 2017 to 24.1 percent in 2022, it will continue to grow to reach $140 billion in the UAE in the same period.

The report also showed that personal wealth in the Middle East rose by 11 percent to $3.8 trillion in 2017, a significant increase compared with the rate for the previous five years.

“BCG research suggests that over 70 percent of wealth management clients see hugely personalised services as a key factor in deciding whether to stay with their current provider or switch to another,” said Markus Massi, senior partner & managing director of BCG Middle East’s Financial Services practice.

“Value creation opportunities touch all parts of the wealth management business and success depends on having or developing a foundation of key management capabilities. We expect leading firms to further separate themselves from the pack over the next few years, a gap that will be increasingly difficult for slow-moving players to close.”

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