The rich are getting richer. And in the oil rich Arabian Gulf, which boasts the greatest portion of household wealth, the rich are getting even richer.
Their fortunes are growing at one of the fastest paces in the world amid an economic renaissance spurred by government spending on civic works such as roads, airports and metros.
That is because in the decade that ended in 2010, oil prices more than tripled, allowing governments in the region to build cash stockpiles and businessmen to benefit from the trickle-down effect of these public projects. During the same period the average wealth of adults in this country alone tripled to US$150,121 from $56,777, according to Credit Suisse, the fifth-largest private bank in the world by assets under management. In Qatar, the richest nation on Earth per capita, almost 18 per cent of households have more than $1 million in investable assets – the threshold that gives you the honour of being called rich, according to a report last month from the Boston Consulting Group.
Global private financial wealth is notoriously difficult to gauge and there are many competing figures floating around. According to Boston Consulting, it grew 14.6 per cent to $152 trillion in 2013, compared with 8.7 per cent in the previous year. That was mostly on the back of a rally in stock markets, rising property valuations and improving economic growth. While most private wealth is still in North America, South East Asia is the fastest growing engine of wealth creation, followed by eastern Europe and the Middle East, the report by the global management consultants says.
In the Middle East and Africa, private wealth increased 11.6 per cent to $5.2tn last year. Oil-rich countries such as the UAE, Saudi Arabia, and Kuwait had above average growth of between 12.8 per cent and 13.6 per cent. And private wealth in the region is expected to grow 6.5 per cent annually to reach $7.2tn by 2018, the report says.
Naturally, that has not escaped the notice of Middle East private bankers – financial experts who specialise in investing money for the rich in assets such as stocks, bonds and property. Unlike wealth managers at retail banks, they can typically also invest money for clients in hedge funds and other exotic assets such as fine art. They also advise the rich on how to pass wealth down from one generation to the next.
During Dubai’s boom years before the downturn of 2008 many of these bankers set up shop in the Dubai International Financial Centre, the region’s answer to Wall Street. But as heydays unwound and the UAE was left with slumping stocks, depressed property prices and hot under the collar creditors, many of those private banks shipped out of town. Now though, there is a reversal of that trend amid the improving economic fortunes of the region – especially as the region is a rare bright spot in a world marked by anaemic growth.
“This region is big for us,” says Pablo Garnica, the Geneva-based chief executive of JPMorgan Private Bank Europe, Middle East & Africa. “This region has the advantage of good macro growth, energy is obviously a big source of it. We see it as a very attractive market. It’s a region of growth with a very young population, sophistication, a curiosity to listen to new ideas. Everything we see, we like.”
Still, the majority of private wealth is controlled by a small number of people, called ultra high-net worth individuals, typically with more than $30m to invest (although some will set that bar as high as $100m). The latest tally by Insight Discovery, a Dubai-based consultancy, counted 58 private banks in the region, with the majority being based in Dubai. About half are international, domiciled outside the region, according to the research firm. Getting figures about how much money is managed in the region by private banks is almost impossible because many guard such data carefully and do not publicise it.
“There’s a lot of money in a small number of hands unlike in some European countries,” says Nigel Sillitoe, the chief executive of Insight Discovery. “And there’s a large number of banks chasing a small number of clients.
“There are a number of ultra high-net worth individuals who prefer dealing with the head office of a Swiss bank rather than a representative office at home. Some banks are said to have increased business by closing their rep office.”
However, now Dubai’s economy is bouncing back, many Swiss private banks, such as Swissquote, are keen to open in the UAE and tout the virtues of their banking industry.
The country is also a haven for wealthy investors in other parts of the Arab world as well as emerging markets, such as Russia and China, that are roiled by political instability or experiencing economic turbulence.
“Switzerland is still considered to be the number one in investor protection and that’s one level of protection that gives us a competitive advantage,” says Mario Camara, the chief executive of Swissquote. “Swiss banking secrecy is not what it used to be but it’s still the best. Switzerland now has to abide by a lot more rules than before but it’s still the most protected financial centre world wide.”
Banks including Swissquote and La Cloche Wealth Management have opened doors at the DIFC in the past year, while banks such as Falcon Private Bank, a Swiss money manager owned by Abu Dhabi, are beefing up their capabilities here while shutting offices in Hong Kong to focus on the super-rich in the Middle East, Africa and eastern Europe.
Typically the rich are owners of family-run businesses that often now have second-generation executives. “Our clients are becoming more sophisticated, educated in the West. Even here, you’ve seen a lot of investment in education,” says Mr Garnica. “And there’s a lot of information that people can access. I think our job is to digest that information and make it actionable. And the younger generation in family businesses are much more involved in the process.”
Even so, private bankers have to contend with their global competitors, local private banks such as Emirates Investment Bank and the ever expanding wealth management arms of the biggest banks in the UAE such as National Bank of Abu Dhabi, Emirates NBD and Abu Dhabi Islamic Bank.
As the good times roll, the rich are now willing not only to take on greater risk but also to invest their money for longer. The fact that many local stock markets have boomed in the past two years has also made many rich people keen to diversify. “In the aftermath of the global financial crisis in 2008 and 2009, clients became extremely risk averse and their investment horizons shortened very considerably,” says Arjuna Mahendran, the chief investment officer at Emirates NBD Wealth Management.
“At that time, if you showed a client an investment anything beyond nine to 12 months, they didn’t even look at it. But as memories have faded of those events and people become a little bit confident, investors are taking longer and longer investment horizons in their portfolio.”
mkassem@thenational.ae
Follow us on Twitter @Ind_Insights
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
MEYDAN CARD
6.30pm Al Maktoum Challenge Round-1 Group One (PA) US$65,000 (Dirt) 1,600m
7.05pm Handicap (TB) $175,000 (Turf) 1,200m
7.40pm UAE 2000 Guineas Trial Conditions (TB) $100,000 (D) 1,600m
8.15pm Singspiel Stakes Group Two (TB) $250,000 (T) 1,800m
8.50pm Handicap (TB) $135,000 (T) 1,600m
9.25pm Al Maktoum Challenge Round-1 Group Two (TB) $350,000 (D) 1,600m
10pm Dubai Trophy Conditions (TB) $100,000 (T) 1,200m
10.35pm Handicap (TB) $135,000 (T) 1,600m
The National selections:
6.30pm AF Alwajel
7.05pm Ekhtiyaar
7.40pm First View
8.15pm Benbatl
8.50pm Zakouski
9.25pm: Kimbear
10pm: Chasing Dreams
10.35pm: Good Fortune
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.”
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Brief scores:
Southampton 2
Armstrong 13', Soares 20'
Manchester United 2
Lukaku 33', Herrera 39'
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
'My Son'
Director: Christian Carion
Starring: James McAvoy, Claire Foy, Tom Cullen, Gary Lewis
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THE%20SPECS
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A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
Analysis
Members of Syria's Alawite minority community face threat in their heartland after one of the deadliest days in country’s recent history. Read more
FROM%20THE%20ASHES
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2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
FIXTURES
Thu Mar 15 – West Indies v Afghanistan, UAE v Scotland
Fri Mar 16 – Ireland v Zimbabwe
Sun Mar 18 – Ireland v Scotland
Mon Mar 19 – West Indies v Zimbabwe
Tue Mar 20 – UAE v Afghanistan
Wed Mar 21 – West Indies v Scotland
Thu Mar 22 – UAE v Zimbabwe
Fri Mar 23 – Ireland v Afghanistan
The top two teams qualify for the World Cup
Classification matches
The top-placed side out of Papua New Guinea, Hong Kong or Nepal will be granted one-day international status. UAE and Scotland have already won ODI status, having qualified for the Super Six.
Thu Mar 15 – Netherlands v Hong Kong, PNG v Nepal
Sat Mar 17 – 7th-8th place playoff, 9th-10th place play-off
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THE SPECS
Engine: 3-litre V6
Transmission: eight-speed automatic
Power: 424hp
Torque: 580 Nm
Price: From Dh399,000
On sale: Now
U19 WORLD CUP, WEST INDIES
UAE group fixtures (all in St Kitts)
- Saturday 15 January: UAE beat Canada by 49 runs
- Thursday 20 January: v England
- Saturday 22 January: v Bangladesh
UAE squad:
Alishan Sharafu (captain), Shival Bawa, Jash Giyanani, Sailles
Jaishankar, Nilansh Keswani, Aayan Khan, Punya Mehra, Ali Naseer, Ronak Panoly,
Dhruv Parashar, Vinayak Raghavan, Soorya Sathish, Aryansh Sharma, Adithya
Shetty, Kai Smith
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Ms Davison came to Dubai from Kerala after her marriage in 1996 when she was 21-years-old
Since 2001, Ms Davison has worked at many affordable schools such as Our Own English High School in Sharjah, and The Apple International School and Amled School in Dubai
Favourite Book: The Alchemist
Favourite quote: Failing to prepare is preparing to fail
Favourite place to Travel to: Vienna
Favourite cuisine: Italian food
Favourite Movie : Scent of a Woman
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