Wealthy residents of the United Arab Emirates were hit harder by the financial crisis than the world’s average millionaire, a new study has found.
Wealth Insight’s report found that in 2012 the United Arab Emirates were home to 48,300 high net worth individuals and 625 UHNWs, an 8 per cent decline from 2008.</p>
This ties in with another, surprising, conclusion from the report, which is that more UAE HNWs (27 per cent) made their money in financial services than in oil and gas (20 per cent). Financial services suffered particularly during the crisis. As a result, per capita GDP in the UAE fell by almost 16 per cent in 2009, compared to a 6 per cent decline on average in the rest of the world.
The report said that the HNW Emirati population will grow by 43 per cent to 69,000 by 2017, and their wealth will increase by 48 per cent to $269 billion in the same period. The UHNW population will also increase by 43 per cent to 893 by 2017, according to the research. Together, Emirati HNWs controlled $182 billion in 2012, or 41 per cent of the country’s total private wealth, the study said.
Almost six in ten Emirati UHNWs lived in Dubai. The emirate benefitted from the absence of an income tax and low tax rates in general, as well as the presence of free zones, such as the Dubai International Financial Centre and the Jebel Ali Free Zone, which have attracted corporations planning to expand in the Middle East.
Abu Dhabi was the second most attractive city for UAE ultra-wealthy, with 26 per cent of the country’s UHNWs living there – mostly millionaires who made their wealth in oil and gas, as the emirate controls the UAE’s biggest oil and gas reserves. Eleven per cent lived abroad and 3 per cent in Sharjah.
The study also found that UAE multi-millionaires were 55 years old on average, four years younger than the world’s average UHNW. They are more likely to be men, with only 8.6 per cent of Emirati multi-millionaires being women.
Interestingly, while Emiratis represent only about 10 per cent of the local population – the country has one of the highest migrant populations in the world, thanks in particular to migration from Asia – local UHNWs are mainly UAE nationals.
Fifty-six per cent of UHNWs in the UAE earned their wealth, while 25.6 per cent created it through entrepreneurial activities and only 18 per cent inherited it. The majority of Emirati multi-millionaires was educated outside their country, mostly in the US, and owned an MBA degree, the study also found. Unsurprisingly, the rise of the HNW population in the region was followed by the growth of the private client and luxury sectors.
‘Not only have we seen an influx of private banks and family offices, catering to the needs of a swelling wealthy population in the UAE,’ Oliver Williams, analyst at Wealth Insight, said in the report. ‘But in the last decade a mass of luxury retailers, auction houses, art galleries, yacht brokers and private aviation companies have set up shops in the country.’
According to the report, luxury collectables, such as classic cars, jewellery and art pieces, accounted for 1.2 per cent of the total assets controlled by UAE millionaires, or $2.1 billion.