The Gulf Cooperation Council (GCC) countries region is fast becoming a lucrative place for banks and wealth managers to do business, with the amount of money privately held by rich households now amounting to $2.2 trillion, up from $1.1 trillion in 2010, a new research has found.
The combined wealth is now being held by at least 1.5 million wealthy households in the GCC. Each of these households have between $200,000 and more than $50 million held in cash or bank accounts, and other assets that can be easily converted into cash.
The data provided by management consultancy Strategy& suggest that there are only a small number of people taking control of the region’s multi-trillion private wealth, and these are the so-called high-net-worth individuals (HNWIs), which have at least $1 million in investable assets. “High-net-worth individuals continue to account for the largest chunk of the region’s wealth at 41 percent,” said Dr. Daniel Diemers, partner with Strategy& in Dubai.
According to a study by Strategy&, the vast proportion of the region’s wealth, amounting to 74 percent, are in the hands of the wealthy residents of the UAE and Saudi Arabia.
The study also found that between 2010 and 2013, more residents have accumulated more wealth in recent years, with the number of affluent households increasing by about 50 percent, from between 850,000 and 880,000 in 2010 to around 1.25 million to 1.324 million.
“The UAE has created the most affluence in the GCC, growing its share of affluent households from 16 percent to 26 percent from 2009 to 2013,” Strategy& said in its report.
The growth in private wealth has been attributed to the positive performance in global equities, improvement in the GCC economies and migration of private wealth from other parts of the Middle East as a result of the Arab Spring.
Between 2009 and 2013, global equities reaped 50 percent gains, further increasing the private wealth of the region’s millionaires. “We estimate that the global equity rally’s impact on existing wealth accounted for around 40 percent of that gain,” said the report.
“The other 60 percent of the $1 trillion in net new wealth was driven by the GCC regional GDP growth, which rose steadily at an average rate of 10 percent per annum as the oil price rose and then was sustained at near-record levels through 2014,” said Jihad K. Khalilk, senior associate with Strategy& in Dubai.
“Governments have used this windfall to spend generously on mega projects, infrastructure, and job creation – all of which helps to produce more income for wealthy individuals and create a generation of newly affluent citizens and expatriates.”