UAE’s financial wealth set to hit $1.3tr by 2027

A quarter of the country's wealth is attributed to ultra high net worth individuals

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Published: Tue 12 Sep 2023, 6:34 PM

Last updated: Tue 12 Sep 2023, 6:35 PM

The UAE’s financial wealth is projected to grow at a compound annual growth rate of 5.5 per cent to $1.3 trillion by 2027 from $1 trillion in 2022 while the share of wealth held by individuals in the range of $1-20 million is expected to grow to 34 per cent during the five-year period, a report by Boston Consulting Group said on Tuesday.

As a much-preferred global hotspot for super-rich individuals, a sizeable portion of the UAE’s financial wealth, approximately 25 per cent, is attributed to ultra high net worth individuals (UHNWIs) worth more than $100 million in 2022. “The influence of these individuals is anticipated to continue to remain consistent until 2027. Individuals with wealth between $1 million-$20 million held 32 per cent of the UAE’s wealth in 2022, with this expected to grow to 34 per cent in 2027,” said the report.

Last year, the UAE recorded the world’s fastest growth rate in the number of ultra-rich individuals with an 18.1 per cent annual increase in 2022. The phenomenal surge in the number of UHNWIs on the back of an array of path-breaking reforms and innovative measures unleashed by the UAE drove their population to 1,116, according to the recent issue of “The Wealth Report” by Knight Frank. Based on the Residential Real Estate 2023 report by Wealth-X & Realm, Dubai has the largest share of UHNW primary residents, which is two-thirds of its global UHNW population.

“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, partner, and head of the Middle East Financial Institutions Practice at BCG.

Equities and investment funds remain the largest asset class in the UAE, making up 58 per cent of total onshore personal wealth in 2022, with bonds expected to have the fastest growth at an 8.4 per cent CAGR between 2022 and 2027, the report — titled “Global wealth report 2023: Resetting the course” — noted. While bonds are expected to grow the fastest with a CAGR of 8.4 per cent between 2022 and 2027, life insurance and pensions are set to become the third largest asset class by 2027, it said.

“Representing 13.2 per cent of the Middle East and Africa’s financial wealth in 2022 and growing at a rate of 6.5 per cent per annum from 2017 to reach $1 trillion 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,” said Mohammad Khan, managing director and partner at BCG.

The report also presents notable findings on the UAE’s real assets and liabilities. Real assets in the UAE grew by 7.5 per cent per year from 2017 to 2022, reaching $1.9 trillion, and are projected to increase by 6.9 per cent per annum to $2.6 trillion by 2027. The liabilities sector expanded by 3.1 per cent per annum during the same period and is expected to grow by 6.3 per cent per annum to $.2 trillion by 2027. “This balanced growth invokes a financial profile of a nation that is confident in taking calculated risks, potentially enhancing the all-around growth narrative,” said the report.