GCC financial wealth will see a strong compounded annual growth rate of 5.2 percent in new wealth, rising from $2.7 trillion to $3.5 trillion from 2021 to 2026, according to a new report from the Boston Consulting Group (BCG).
The report, titled “Global Wealth 2022: Resilience is not an option”, showed that stocks and investment funds in the GCC constitute the largest asset class with 53 percent of total personal wealth in 2021, backed up by currency and deposits up to a maximum of 38 percent.
While bonds account for only 2 percent of total personal wealth, this asset class is expected to grow the fastest at a compound annual growth rate of 7.7 percent by 2026. Life and pension insurance is also expected to become the third largest asset class, throughout the year, for the next five years.
“We are seeing financial wealth in the Middle East and Africa grow year after year, with the GCC countries in particular outperforming, despite the massive global market crisis.
In fact, the GCC alone accounted for 38% of the financial wealth of the Middle East and Africa in 2021, after growing 5% each year since 2016 to reach $2.7 trillion, with an exceptional value of 9% at the height of the Covid pandemic from 2020 to 2021,” said Mustafa Bosca, managing director, and partner at Boston Consulting Group.
In 2021, approximately 30 percent of the wealth of GCC countries was obtained from ultra-high net worth individuals having over $100 million, and this is expected to grow to 32 percent in 2026. Those whose wealth was about one million dollars represented 30 percent of the region’s wealth in 2021, This is expected to grow to 32 percent in 2026. Individuals with wealth over $1 million represented 30 percent of the region’s wealth in 2021 and is expected to remain the same until 2026, according to the report.
UAE
Regarding the UAE, Bosca says, “The financial wealth in the UAE grew by 20% in 2021 compared to 11% globally. We had a net influx of more than 2,000 millionaires into the UAE in 2021, and it contributed 30 percent of the total financial wealth of the GCC.
The Boston Group expects more than 4,000 millionaires to flow into the UAE in 2022.
Bosca believes that “the UAE is very well positioned to win both in cryptocurrency and climate-related wealth opportunities. We are already seeing major digital asset companies and exchanges set up in the UAE, thanks to the crypto-friendly regulatory environment. In addition, the conference COP28, which will be held in the UAE next year, will cement the UAE’s position as a destination for sustainable investments, and we believe that wealth managers and banks should look carefully at these two areas to capitalize on this growth.”
