According to a recent report from the Boston Consulting Group, the United Arab Emirates (UAE) is poised to undergo a robust Compound Annual Growth Rate (CAGR) of 5.5% in new wealth. This growth will see the financial wealth of the UAE increase from $1T to $1.3T between 2022 and 2027.
The BCG report, titled ‘Global Wealth Report 2023: Resetting the Course,’ highlights that in 2022, equities and investment funds constituted the largest asset class in the UAE, accounting for 58% of total personal wealth, according to WAM.
They project that bonds will exhibit the swiftest growth, with an expected CAGR of 8.4% from 2022 to 2027. Additionally, the report anticipates that life insurance and pensions will become the third largest asset class by 2027.
“Representing 13.2% of the Middle East and Africa’s financial wealth in 2022 and growing at a rate of 6.5% per annum from 2017 to reach $1T in 2022, the UAE’s trajectory signals the country’s strong position as one of the preferred global destinations for the wealthy. This impressive growth reflects the strong value proposition the country has developed for high-net-worth individuals (HNWIs),” said Mohammad Khan, Managing Director and Partner, at BCG.
UHNW Individuals’ Consistent Impact on UAE’s Wealth
Ultra High Net Worth (UHNW) individuals, those with assets exceeding $100M, played a significant role in contributing to the UAE’s financial wealth in 2022, accounting for approximately 25% of the total. These projections anticipate that these wealthy individuals will maintain a stable influence through 2027.
Furthermore, in 2022, individuals with wealth ranging from $1M to $20M owned 32% of the UAE’s wealth, and experts anticipate this share will increase to 34% by 2027.
“The UAE’s success in attracting and retaining high net worth individuals contributes to its growing economic prowess. Not only are they accelerators of innovation and investment in the region, but they also warrant its sustained growth,” said Lukasz Rey Managing Director and Partner, Head of Middle East Financial Institutions Practice, BCG.
The report also unveils significant findings regarding the UAE’s real assets and liabilities. Real assets in the UAE demonstrated a yearly growth rate of 7.5% between 2017 and 2022, reaching a total of $1.9T. Projections indicate a continued increase, with a 6.9% annual growth rate expected to push the figure to $2.6T by 2027.
Concurrently, the liabilities sector in the UAE expanded at a rate of 3.1% per annum during the same period. It is expected to experience annual growth of 6.3%, reaching $0.2T by 2027.
This balanced growth underscores the financial profile of a nation that exhibits confidence in taking calculated risks, potentially enhancing its overall growth trajectory.
The report offers an in-depth analysis of wealth managers’ performance across various aspects of their operations, along with market sizing and the pursuit of sustained profitability in the long term.
