Private wealth in the (P)GCC has doubled from $1.1 trillion in 2010 to $2.2 trillion in 2014 at an overall compound annual growth rate (CAGR) of 17.5 percent, according to a study.
The study by management consultancy Strategy estimates that there are between 1.5 million and 1.6 million wealthy households in the (P)GCC with total investable assets of around $2.2 trillion, TradeArabia reported.
Most of the region’s private wealth resides in Saudi Arabia (44 percent), but the UAE has made notable gains with its share increasing from 24 percent to 30 percent during 2009 to 2013. Together, Saudi Arabia and the UAE control 74 percent of the region’s private wealth, up from 71 percent in 2009.
Dr Daniel Diemers, partner with Strategy in Dubai, said: “High-net-worth individuals (HNWIs) continue to account for the largest chunk of the region’s wealth at 41 percent, followed by ultra-high-net-worth individuals (UHNWIs) at 34 percent. However, the affluent segment has been growing the fastest over the last five years at 21 percent CAGR, more than doubling in absolute dollar terms from $261 billion in 2009 to $560 billion in 2013.”
Strong Growth
According to the study, the growth of affluent households from 2010 to 2013 was strong, with total households increasing about 50 percent, from an estimated range of 850,000 to 880,000 in 2010, to a range of 1.25 million to 1.325 million. The UAE has created the most affluence in the (P)GCC, growing its share of affluent households from 16 percent to 26 percent from 2009 to 2013.
Jihad K Khalil, senior associate with Strategy in Dubai, said: “Powerful macroeconomic and socio-demographic forces are propelling the growth of wealthy households in the (P)GCC. One key driver has been the strong rebound in global equity markets as increasingly aggressive allocations among the region’s wealthiest helped them recapture value destroyed during the crisis.
From 2009 to 2013, global equities saw 50 percent gains. Of the $1 trillion net increase in wealth during the period, we estimate that the global equity rally’s impact on existing wealth accounted for around 40 percent of that gain.
“The other 60 percent of the $1 trillion in net new wealth was driven by the (P)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.
Governments have used this windfall to spend generously on megaprojects, 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,” he added.
