By Santhosh V Perumal/Business Reporter
The Middle East, whose wealth is estimated to be in excess of $4.5tn with about 35 billionaires, is the only region where growth in private wealth of high net worth individuals matches that with ultra high net worth individuals (UHNWI), a Qatar Financial Centre Authority study said.
A majority of wealth owners in the region intend to continue to invest their money in the Middle East at the expense of other regions; although Africa figured prominently among investment destinations outside the region, said the inaugural study ‘Beyond Convention’, jointly undertaken with Campden Wealth, the London-based supplier of market insight.
The Middle East region witnessed 8% growth each in the private wealth of HNWIs (net worth of $1mn to $100mn) and UHNWIs (net worth of more than $100mn) against the world’s average of 6% and 10% respectively, said the report, which is based on quantitative research with 47 UNHWIs from the GCC as well as from Lebanon, Syria and Egypt.
The growth of private wealth of HNWIs and UHNWIs in the Middle East lagged Latin American growth of 11% and 9% and Asia-Pacific 13% and 18%.
The Middle East had few family offices (FOs) based in the region and given the level of wealth, there was very little correlation with the number of FOs and wealth owners but the sophistication and the number of FOs in the GCC (Gulf Co-operation Council) and the broader Middle East are expected to grow in future.
However, the multi-family office model had not gained “critical mass” in the region due to “lack of trust to pool money with other families” and was not expected to achieve positive results in the near future, the study said.
Finding that regional investors are taking much control as evidenced by 55% of respondents preferring to keep their money in the Middle East, it said “this is a significant development and backs up studies showing capital from emerging markets is staying put and being deployed much more in these markets than in the past.”
Financial centres like Qatar, Dubai and Abu Dhabi are increasingly being seen as ‘safe havens’ to deposit money, it said, adding “this was probably brought to focus more than ever by the large sums of money that entered these jurisdictions during the Arab Spring and that is continuing to do so.”
It found that wealthy families in the Middle East have a strong entrepreneurial spirit, want to play an active role in managing their money, scrutinise their wealth manager relationships more closely than a year ago, and have great confidence in the future of the region.
More than 60% of the respondents held that they pursued wealth creation rather than wealth preservation as an investment goal (typically this would mean that few would be content with less than 8% growth on their investments).
Further, respondents mirrored their peer group elsewhere in the world by expecting to earn high returns on relatively low-risk investments.
But amongst the asset classes that the respondents expressed a preference for, alternative investments such as hedge funds and private equity were popular.
