GCC significant repository of capital

Today, almost half of the region’s wealth resides in Saudi Arabia (44 percent), but the UAE has made notable gains. The UAE’s share of the GCC’s wealth has increased from 24 percent to 30 percent from 2009 to 2013. Together, Saudi Arabia and the UAE control 74 percent of the region’s wealth, up from 71 percent in 2009.
According to the recently released “Global wealth management outlook 2014-15: New strategies for a changing industry” by Strategy&, which is part of the PwC network, the GCC has been the most consistent of the emerging markets, recording growth of 16 percent or more each year since 2010 and doubling total private wealth from $1.1 trillion to $2.2 trillion for an overall compound annual growth rate (CAGR) of 17.5 percent. The UAE led the GCC countries with 25 percent CAGR, followed by Oman (21 percent) and Bahrain (18 percent), which grew from much smaller bases.
Not surprisingly, high-net-worth individuals (HNWIs) continue to account for the largest chunk of the region’s wealth at 41 percent, followed by ultra-high-net-worth individuals (UHNWIs) at 34 percent. However, the affluent segment has been growing the fastest over the last five years at 21 percent CAGR, more than doubling in absolute dollar terms from $ 261 billion in 2009 to $560 billion in 2013.
However, during the same time frame wealth creation for the region’s HNWIs, at 76 percent, and UHNWIs, at 94 percent, was hardly anemic.
Likewise the growth of affluent households from 2010 to 2013 was strong, with total households increasing about 50 percent, from an estimated range of 850,000 to 880,000 in 2010, to a range of 1.25 million to 1.325 million.
What is noteworthy is that the household growth among the HNW and UHNW was far slower and only in the low single digits.
Strategy& estimates that today there are between 1.5 million and 1.6 million wealthy households in the GCC with total investable assets of around $ 2.2 trillion.
Powerful macroeconomic and sociodemographic forces are propelling the growth of wealthy households in the GCC.
Clearly, the GCC is a globally significant repository of capital. To what extent some of the risk-averse inflows can be retained and mobilized remains a question mark but there are opportunities for the region to do much more to develop as a wealth and asset management hub. The old mentality of relying on other parts of the world for much of this still remains strong, however.

— khalil@arabnews.com