UAE still among most preferred destinations for ultra-wealthy

But there could be exodus of millionaires in short term due to COVID-19, says New World Wealth

Dubai high rise buildings. Image courtesy Dubai Media Office Twitter handle.

Dubai high rise buildings. Image courtesy Dubai Media Office Twitter handle.

Although the UAE could see an exodus of millionaires due to the coronavirus pandemic this year, the country will continue to be one of the world’s most preferred destinations for the ultra-wealthy in the long term, according to a new report.

Approximately 1,300 high-net-worth individuals (HNWIs) migrated to the country in 2019, up by 2 percent from a year earlier, New World Wealth said in its report released on Tuesday.

The additional wealth inflows made the UAE one of the top ten destinations for affluent individuals in 2019, just behind New Zealand, Israel, Singapore, Canada and Switzerland.

However, the numbers could decline this year in light of the health pandemic.

According to the research firm, wealthy individuals won’t be finding it easy to move from one place to another this year, when countries around the world have imposed travel restrictions as part of the precautionary measures to stem the spread of the virus.

“Travelling/ migrating is likely to be more complicated due to ongoing quarantines and health checks in most countries,” said New World Wealth.

It said that the traditional investor visa programmes, which are designed to entice affluent individuals to move their country of residence or acquire a second passport in exchange for their investment, might not attract high investor influx at this time.

“Many [investor programmes] are expected to reduce their entry requirements in 2020/2021,” said the report.

Exodus of the wealthy

The UAE saw nearly 15,000 new millionaires in 2019, making the total number of HNWI population more than 197,000, according to Knight Frank. The country has recently introduced a 10-year golden residency visa for investors and businessmen.

With the coronavirus pandemic crippling businesses and disrupting everyone’s mobility, it is believed that the affluent numbers could decline this year.

“There are concerns that countries with large numbers of wealthy expats, such as the UAE, may see an HNWI exodus in 2020/2021. This is a possibility in the short term (1 to 2 years),” New World Wealth said.

“However, we expect the UAE, and Dubai specifically, to remain a popular destination for migrating HNWIs in the long term due to its status as the only real safe haven in the Middle East and North Africa region,” it added.

Regional decline

As of June 2020, the number of HNWIs in the region dropped by 18 percent to 340,000, according to New World Wealth.

Andrew Amoils, wealth analyst of the firm, said the possible reasons for the wealth decline include the weak property market and declining stock market returns.

“The property market weakened in most major markets, especially in the prime market. [As for the stock markets], the MSCI World Index was down by around six percent over the six-month period. The MSCI Emerging Market Index was especially hard hit,” Amoils told Zawya earlier.

Other popular destinations

As of 2019, the most preferred destination for wealthy individuals was Australia, which recorded 12,000 migrating millionaires, followed by the United States, which welcomed 10,800 HNWIs and Switzerland (4,000).

New World Wealth regularly tracks the migration of wealth around the world. The migration figures are considered a very important gauge of the health of an economy. If a country, for instance, is seeing a significant number of HNWIs leaving the country, it is probably due to serious problems in the country, according to NW Wealth.

“Conversely, countries that attract HNWIs tend to be very healthy and normally have low crime rates, good schools and good business opportunities,” the global market research group said in its report.

Australia, US and Switzerland are expected to remain the preferred HNWI destinations globally over the next decade.

(Reporting by Cleofe Maceda; editing by Seban Scaria)

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