• Uncategorized

UAE’s Financial Wealth Poised to Soar to $1.3 Trillion by 2027, With UHNWIs at the Helm

by Swati Gupta

September 16, 2023 19

The UAE’s financial prosperity is on a trajectory to reach $1.3 trillion by 2027, propelled by a robust compound annual growth rate (CAGR) of 5.5 percent from $1 trillion in 2022, as reported by the Boston Consulting Group (BCG). A significant portion of this wealth, approximately 25 percent, is attributed to ultra high net worth individuals (UHNWIs), each worth more than $100 million in 2022. This dynamic landscape reaffirms the UAE’s status as a favored global destination for the super-rich.

As per the latest report from BCG, the UAE’s financial landscape is experiencing a remarkable transformation. Over the next five years, the wealth held by individuals within the $1-20 million range is expected to grow to 34 percent, further solidifying the nation’s position as a global financial powerhouse. In 2022, individuals in this wealth bracket already held 32 percent of the UAE’s total wealth.

The UAE witnessed a staggering 18.1 percent annual increase in the number of ultra-rich individuals in 2022, securing its place as the world’s fastest-growing hub for UHNWIs. This remarkable rise in the UHNWI population, totaling 1,116 individuals, can be attributed to a series of groundbreaking reforms and innovative initiatives implemented by the UAE, as highlighted in “The Wealth Report” by Knight Frank.

Dubai, in particular, boasts the largest share of UHNW primary residents, accounting for two-thirds of the global UHNW population. This influx of high-net-worth individuals contributes significantly to the UAE’s economic prowess, acting as catalysts for innovation and investment across the region.

Lukasz Rey, Managing Director, Partner, and Head of the Middle East Financial Institutions Practice at BCG, commented on the UAE’s success in attracting and retaining high-net-worth individuals, stating, “Not only are they accelerators of innovation and investment in the region, but they also warrant its sustained growth.”

The report, titled “Global Wealth Report 2023: Resetting the Course,” reveals that equities and investment funds remain the dominant asset class in the UAE, constituting 58 percent of total onshore personal wealth in 2022. Bonds, on the other hand, are poised for the fastest growth, with an expected CAGR of 8.4 percent between 2022 and 2027. Moreover, life insurance and pensions are projected to become the third-largest asset class in the country by 2027.

Representing 13.2 percent of the Middle East and Africa’s financial wealth in 2022 and growing at a rate of 6.5 percent per annum from 2017 to reach $1 trillion in 2022, the UAE’s trajectory underscores its position as a preferred global destination for the wealthy. Mohammad Khan, Managing Director and Partner at BCG, highlighted the UAE’s impressive growth, emphasizing the strong value proposition the nation has cultivated for high-net-worth individuals.

The report also sheds light on the UAE’s real assets and liabilities. Over the five-year period from 2017 to 2022, real assets in the UAE experienced substantial growth, expanding by 7.5 percent per year to reach $1.9 trillion. Projections indicate that this sector will continue to expand at a rate of 6.9 percent per annum, reaching $2.6 trillion by 2027. In contrast, the liabilities sector, which grew by 3.1 percent per annum during the same period, is expected to accelerate further, growing by 6.3 percent per annum to $2 trillion by 2027.

This balanced growth in both real assets and liabilities signifies a nation that is unafraid to take calculated risks, enhancing its all-around growth narrative. The UAE’s financial landscape appears poised for continued expansion and diversification, driven by a thriving community of high-net-worth individuals and a conducive environment for wealth creation and investment.