Private wealth in the UAE to grow by 10.7% in five years

Private wealth in the UAE is estimated to grow at a compound annual growth rate of 10.7 per cent over the next five years, a new study showed.

According to Boston Consulting Group, private wealth in the Emirates is estimated to reach $1 trillion by 2019, with the wealth breakdown anticipated to be 43 per cent in cash and deposits, 9 per cent in bonds, and 47 per cent in equities.

In 2014, private wealth in the UAE grew by 8.4 per cent with most of the wealth driven by equities. The report also noted that between 2013 and 2014, the amount of wealth held in equities grew 13.8 per cent.

Over the net five years, private wealth held in equities in the UAE is expected to increase at a CAGR of 18.5 per cent.

In comparison, bonds as well as cash and deposits are predicted to grow by 3.8 per cent and 6.2 per cent respectively, BCG said.

“In terms of wealth distribution, private wealth held by ultra-high-net-worth households (those with above $100 million) in the UAE grew by 9 per cent in 2014, on the back of dynamic equity markets and a growing economy,” said Markus Massi, partner & managing director at BCG Middle East.

“Private wealth held by the UHNW segment is set to soar by an impressive 21.1 per cent by 2019. Interestingly, in the UAE, the upper high-net-worth segment (those with between $20m and $100m) witnessed the highest growth in 2014.”

Wealth held by the upper HNW segment in the UAE grew by 16.1 per cent last year and is expected to grow by 12 per cent over the next five years.

The growth in wealth will be triggered by a large number of households entering the segment and a rise in average wealth per household, the report said.

Meanwhile, private wealth held by the lower HNW segment (those with between $1m and $20 m) grew at a slightly slower rate of 9.1 per cent in 2014. However this segment is expected to see a growth of 12.9 per cent in private wealth over the next five years.

“The total number of millionaire households (those with more than $1m in private wealth) in the UAE increased by 5.5 per cent in 2014,” said Massi.

“Looking ahead, it is set to grow another 5.3 per cent by 2019.”

Overall private wealth in the Middle East and Africa region increased by more than 9 per cent to reach nearly $6 trillion in 2014, the report said.

With a projected CAGR of 9 per cent, the region’s private wealth will rise to an estimated $9 trillion in 2019 with the UAE ($1 trillion) and Saudi Arabia ($2 trillion) being the largest markets.