UAE is expected to see strong financial growth, with a projected Compound Annual Growth Rate (CAGR) of 5.5 percent in new wealth, a new report has found.
The nation’s wealth expected to rise from $1 trillion to $1.3 trillion from 2022 to 2027, as per the ‘Global Wealth Report 2023: Resetting the Course‘ by the Boston Consulting Group (BCG).
In the UAE, equities and investment funds remained the dominant asset class, constituting 58 percent of total personal wealth in 2022.
However, bonds are expected to see the fastest growth, with a CAGR of 8.4 percent from 2022 to 2027, while life insurance and pensions are expected to become the third-largest asset class by 2027.
“This impressive growth reflects the strong value proposition the country has developed for high-net-worth individuals (HNWIs),” Mohammad Khan, Managing Director and Partner at BCG said highlighting the UAE’s financial growth.
UAE Ultra-High Net Worth individuals contribute over $100 million in 2022
The report also noted the massive contribution of Ultra-High Net Worth (UHNW) individuals, worth over $100 million, who accounted for around 25 percent of the UAE’s financial wealth in 2022. This is expected to carry on until 2027.
Meanwhile, individuals with wealth ranging from $1 million to $20 million held 32 percent of the UAE’s wealth in 2022, projected to grow to 34 percent by 2027.
“Not only are they accelerators of innovation and investment in the region, but they also warrant its sustained growth,” Lukasz Rey, Managing Director and Partner at BCG said highlighting the role of HNWIs in the UAE’s economic success.
The report also revealed that the UAE’s real assets and liabilities grew by 7.5 percent annually from 2017 to 2022, reaching $1.9 trillion. These assets are projected to increase by 6.9 percent per year, reaching $2.6 trillion by 2027.
Moreover, the UAE’s liabilities sector expanded by 3.1 percent annually during the same period and is expected to grow by 6.3 percent per year to $0.2 trillion by 2027.
This balanced growth signifies a nation confident in taking calculated risks, potentially enhancing overall economic growth.
The report also provides insights into wealth management, outlining eight initiatives to achieve sustainable profitability in the sector.
These include scalable client acquisition, private-market offerings, a focus on fixed-income products, and the integration of generative artificial intelligence (GenAI) in financial advice.
On the cost side, strategies include end-to-end (E2E) process review, informed shoring decisions, third-party tech use, and simplifying products and services to streamline operations and meet various client needs.
“To ensure long-term profitability in wealth management, strategic adoption of initiatives like scalable client acquisition, distinctive private-market offerings, and the integration of GenAI in financial advice can revolutionise revenue generation,” Khan added.
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