Bahrain’s wealth is a fraction of Saudi Arabia’s $1 trillion, but the smaller kingdom has seen the GCC’s fastest wealth growth since 2015, according to a new report by Boston Consulting Group (BCG).
Global wealth continued to grow in 2020 despite the pandemic, according to BCG, and the Middle East was no different, growing eight percent to $11 trillion.
Mustafa Bosca, managing director and partner at BCG said there were a number of factors involved in the region’s wealth growth, including greater emphasis on savings as individuals stayed at home during the COVID-19 movement restrictions.
“First and foremost, the government support in terms of various ways, both through the banking system, through contribution through different parts of the economy,” Bosca said.
“The second thing is, also around the increased savings – as in other parts of the world. The Middle East citizens and residents could not engage in some of the major activities, going to restaurants, tourism travelling outside the region - that increased the savings.>
Mustafa Bosca Managing Director and Partner BCG.
“The capital market performance has been strong, not as much as other parts of the world, but these are the three reasons why the Middle East has been strong,” he added.
While Bahrain has seen the fastest compound annual growth rate (CAGR) of 4.9 percent since 2015 to $66 billion, Bosca said much larger growth was expected in Oman going forward.
Saudi has seen a CAGR of 4.1 percent since 2015. According to BCG, Saudi’s wealth will reach $1.2 trillion by 2025. Oman’s CAGR was 3.8 percent and its wealth reached $64 billion, Qatar’s CAGR was at 3.6 percent and its total wealth stood at $263 billion.
The UAE saw the smallest CAGR but has the second largest pool of wealth after Saudi at $600 billion.
Saudi and the UAE hold nearly three quarters of the GCC’s combined wealth, at 45 percent and 26 percent respectively.
At a roundtable to launch BCG’s report, Global Wealth 2021: When Clients Take the Lead, Bosca said the UAE has established itself as a leading global financial centre, holding a significant amount of cross border wealth coming from other parts of the world and the Middle East.
“It is right now the sixth largest financial centre when it comes to cross border wealth – about half a trillion dollars of wealth by residents of other countries are currently held in the UAE, and this is of course a phenomenal achievement over the past years and decades for the UAE.”
Bosca also highlighted an opportunity for wealth managers in the Middle East, saying there are 4.5 million individuals who have wealth of between AED 500,000 and AED 10 million ($2.7 million) who are currently not served well.
“Their total investable wealth is almost $1 trillion - $0.8 trillion. There is big revenue potential to make in serving the financial wealth management needs of these customers,” he said, highlighting the need for a different business model with the tools and pricing to democratise difficult access investments.
(Reporting by Imogen Lillywhite; editing by Seban Scaria)
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