The UAE is one of the largest wealth hubs in the Middle East and presents a growing opportunity for the wealth management and private banking industry. A recent WealthInsight report looks into the trends of wealthy individuals in the UAE in a review from 2010-14, and provides forecasts for growth in the period up to 2019
There is strong growth in the wealthy population of the UAE, which presents a captive market for the wealth management and private banking industry. In 2014, there were 50,595 high net worth individuals (HNWIs) in the UAE holding $263bn in wealth. The UAE HNWI population rose by 4.8% in 2014, following a 7.6% increase in 2013.
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According to WealthInsight, growth rates for both HNWI wealth and numbers are expected to improve moving towards 2019 where the HNWI population is forecast to grow by 8.6% to reach 57,451.
Total wealth of HNWIs is projected to grow by 30.7% to reach $364.1bn. The ultra high net worth individual (UHNWI) population was also significant with 685 resident individuals in 2014, with an average per capita wealth of US$157.4m. The make up of this demographic included 14 billionaires, 88 centimillionaires and 556 affluent millionaires.
UHNWIs accounted for 1.3% of thUAE’s total HNWI population in 2014. The number of UHNWIs in the UAE increased by 22.8% during the review period, from 536 in 2010 to 685 in 2014.
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By GlobalDataWealth management in the UAE
Despite unfavourable world market conditions, the wealth management market in the UAE is rising. The UAE market is attractive not only for local development but also to foreign institutions, as it holds $95 billion in wealth.
WealthInsight expect private banks and institutions to reinforce and centralise their operations over the forecast period, and allocate more resources to better understand their client base and provide higher levels of services.
The leading domestic private banks in UAE are Emirates NBD Private Banking, Emirates Investment Bank, ADCB Wealth Management, Union National Bank Private Banking, Mashreq Private Banking, ADIB Wealth Management, National Bank of Abu Dhabi Private Banking, Sharjah Islamic Bank, Dubai Islamic Bank Wealth Management and Emirates Investment Bank.
Foreign banks are also active in the region and include Societe Generale, ABN AMRO Private Banking, Credit Suisse, HSBC, Citibank UAE, Standard Charted, Barclays, UBS, Pictet, JP Morgan and Arab Bank Plc (Dubai).
Asset allocation of HNWI investments
In 2014, real estate was the largest asset class for UAE HNWIs, with 23.9% of total HNWI assets. This was followed by equity with 23.7%, business interests with 20.0%, cash with 18. 6%, alternatives with 10.5% and fixed-income with 3.4%.
Real estate and equities recorded growth during the review period, at respective rates of 23.9% and 23.7%.
The proportion of alternative assets held by UAE HNWIs decreased during the review period from 11.5% in 2010 to
10. 5% in 2014. HNWI allocations to commodities decreased from 2.8% to 2.4% over the same period.
According to WealthInsight, allocations in commodities are expected to decline over the forecast period to reach 1.9% of total HNWI assets by 2019, as global liquidity tightens due to a forecast near term drop in demand for raw materials from China.
UAE HNWI liquid assets valued US$120.4 billion in 2014, representing 45.7% of total wealth holdings.
