Personal wealth held in investable assets in the UAE is forecast to grow by 7 per cent per year to reach $590 billion by 2022, driven by an uptick in equities and investment funds, following steady growth since 2016, according to a Boston Consulting Group.
Investable assets are cash and bank accounts, equity, bonds, securities and investment accounts, which can be readily converted into cash. Non-investable assets, which are set to see stronger growth of 11 per cent per year in the next five years, include life insurance and pensions, unlisted equity and other equity classes.
Between 2016 and 2017, total UAE personal wealth grew by 8 percent year-on-year, the report said. Currency and deposits accounted for the highest proportion of UAE wealth assets in 2017, at 46 per cent, followed by offshore assets at 30 per cent, life insurance and pensions at 15 per cent and equities and investment funds at 9 per cent.
Most asset allocations experienced growth last year, with equities and investment funds leading the way with 15 per cent year-on-year growth, BCG said. Other drivers of asset class growth included currency and deposits at 11 per cent, life insurance and pensions at 10 per cent, and offshore at 2 per cent.
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[ Rising Middle Eastern private wealth means advisers need to stay sharp ]
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[ Dubai to see 60% rise in ultra-wealthy individuals by 2026 ]
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“While bonds experienced a significant global decline of 10 per cent, bonds in the UAE grew by 1 per cent in the 2016-2017 period,” BCG noted.
Looking to the future, some asset classes will experience “slightly slower but still steady” annual growth, such as equities and investment funds at 12 per cent and currency and deposits at 9 per cent, the report said. Life insurance and pensions is forecast to grow at 11 per cent per year, offshore at 3 percent, and bonds at 2 percent.
Personal wealth in the Middle East rose by 11 per cent to $3.8 trillion in 2017, according to the report, while global personal financial wealth grew by 12 per cent to $201.9tn. Global growth was “mainly driven by the bull market environment in all major economies and the significant strengthening of most major currencies against the dollar”.
While the proportion of total global assets represented by offshore is expected to decline over the next five years to 24.1 per cent in 2022 from 30 per cent in 2017, it will continue to grow at 3 per cent per year to reach $140bn in the UAE.
“As the regulatory climate has tightened over the last decade, there have been significant flows back onshore,” Markus Massi, senior partner and managing director of BCG Middle East’s financial services practice. In the UAE, this is signified by the expected decrease in offshore assets by 6 per cent between 2017 and 2022, he said.
COMPANY PROFILE
Name: Haltia.ai
Started: 2023
Co-founders: Arto Bendiken and Talal Thabet
Based: Dubai, UAE
Industry: AI
Number of employees: 41
Funding: About $1.7 million
Investors: Self, family and friends
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The Killer
Director: David Fincher
Stars: Michael Fassbender, Tilda Swinton, Charles Parnell
Rating: 4/5
MATCH INFO
Uefa Champions League semi-final, first leg
Tottenham 0-1 Ajax, Tuesday
Second leg
Ajax v Tottenham, Wednesday, May 8, 11pm
Game is on BeIN Sports
Diriyah project at a glance
- Diriyah’s 1.9km King Salman Boulevard, a Parisian Champs-Elysees-inspired avenue, is scheduled for completion in 2028
- The Royal Diriyah Opera House is expected to be completed in four years
- Diriyah’s first of 42 hotels, the Bab Samhan hotel, will open in the first quarter of 2024
- On completion in 2030, the Diriyah project is forecast to accommodate more than 100,000 people
- The $63.2 billion Diriyah project will contribute $7.2 billion to the kingdom’s GDP
- It will create more than 178,000 jobs and aims to attract more than 50 million visits a year
- About 2,000 people work for the Diriyah Company, with more than 86 per cent being Saudi citizens
Confirmed bouts (more to be added)
Cory Sandhagen v Umar Nurmagomedov
Nick Diaz v Vicente Luque
Michael Chiesa v Tony Ferguson
Deiveson Figueiredo v Marlon Vera
Mackenzie Dern v Loopy Godinez
Tickets for the August 3 Fight Night, held in partnership with the Department of Culture and Tourism Abu Dhabi, went on sale earlier this month, through www.etihadarena.ae and www.ticketmaster.ae.
Dubai works towards better air quality by 2021
Dubai is on a mission to record good air quality for 90 per cent of the year – up from 86 per cent annually today – by 2021.
The municipality plans to have seven mobile air-monitoring stations by 2020 to capture more accurate data in hourly and daily trends of pollution.
These will be on the Palm Jumeirah, Al Qusais, Muhaisnah, Rashidiyah, Al Wasl, Al Quoz and Dubai Investment Park.
“It will allow real-time responding for emergency cases,” said Khaldoon Al Daraji, first environment safety officer at the municipality.
“We’re in a good position except for the cases that are out of our hands, such as sandstorms.
“Sandstorms are our main concern because the UAE is just a receiver.
“The hotspots are Iran, Saudi Arabia and southern Iraq, but we’re working hard with the region to reduce the cycle of sandstorm generation.”
Mr Al Daraji said monitoring as it stood covered 47 per cent of Dubai.
There are 12 fixed stations in the emirate, but Dubai also receives information from monitors belonging to other entities.
“There are 25 stations in total,” Mr Al Daraji said.
“We added new technology and equipment used for the first time for the detection of heavy metals.
“A hundred parameters can be detected but we want to expand it to make sure that the data captured can allow a baseline study in some areas to ensure they are well positioned.”
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