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Market Research Report

Wealth in the UAE: HNW Investors 2017

Published by GlobalData Product code 358426
Published Content info 51 Pages
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Wealth in the UAE: HNW Investors 2017
Published: March 14, 2017 Content info: 51 Pages
Description

Resident population in the UAE is predominantly comprised of expats. Reflecting this, expats also constitute a noteworthy 74.6% of the local HNW population - which has considerable implications when it comes to investors' product and service demand. With strong demand for all planning services, being able to offer a holistic service proposition is a must in the UAE. Emirati HNW individuals have typically sourced their wealth predominantly through earned income, but family business owners represent a sizable target market as well.

Expats account for the majority of the UAE's wealthy residents, making them a key target segment. Solutions such as offshore booking services and services catered specifically to non-resident Indians (one of the largest expat groups) must be part of every wealth manager's service proposition. As UAE inheritance procedures are regulated by Sharia law, many investors need advice to pass down their wealth to their loved ones in line with Islamic rule. Advisors should partner with legal practices in order to offer both Sharia-compliant and secular legal services to different client groups.

Demand among Emirati HNW individuals is strongly geared towards advisory mandates. Given that demand is set to increase, wealth managers should lead with advisory mandates when promoting their services. The leading generator of wealth is the property and real estate sector, followed by oil, gas, and mining. Bonds are the preferred asset class, followed by property, as Emirati investors tend to have a pronounced risk-averse nature. Wealth managers in the UAE face a competitive but lucrative market, as most of Emirati HNW individuals' investments are in advisory mandates.

The report "Wealth in the UAE: HNW Investors 2017" provides the UAE wealth market against the current market size and analyses about future growth prospects using our projections for the market to 2020. This report also identifies your most promising client segment by analyzing penetration of affluent individuals in the UAE. Moreover, it evaluates how the Emirati tax system will impact HNW clients.

Companies mentioned in this report: Mondial Dubai, James Berry & Associates, Old Mutual Wealth, Skandia, Credence, HSBC.

Scope

  • Most Emirati HNW investors are male professionals under the age of 60, and they have primarily sourced their wealth through property and real estate.
  • Bonds and property are the preferred types of investment for Emirati investors, as many Sharia-compliant options are available for these asset classes.
  • Advisory mandates are the preferred type of asset management among UAE investors, as Emirati investors lack the knowledge and expertise to manage their finances on their own.
  • Financial and inheritance planning services are particularly in demand, but looking forward demand for all planning services will grow strongly.

Reasons to buy

  • Benchmark your share of the UAE wealth market against the current market size.
  • Forecast your future growth prospects using our projections for the market to 2020.
  • Identify your most promising client segment by analyzing penetration of affluent individuals in the UAE.
  • Evaluate your HNW proposition by understanding how the Emirati tax system will impact HNW clients.
  • Review your offshore strategy by learning HNW motivations for offshore investments and their preferred booking centers.
Table of Contents

Table of Contents

Table of Contents

  • 1. EXECUTIVE SUMMARY 2
  • 1.1. HNW individuals are typically expats and have sourced their wealth either through earned income or family business ownership 2
  • 1.2. Key findings 2
  • 1.3. Critical success factors 2
  • 2. PROFILING THE EMIRATI HNW INVESTOR 9
  • 2.1. Earned income remains the largest source of wealth 9
  • 2.1.1. The bulk of Emirati HNW individuals are male and below 60 years of age 9
  • 2.1.2. Earned income is the leading source of Emirati HNW wealth 10
  • 2.1.3. Many HNW investors have built their fortunes through property and real estate 11
  • 2.1.4. Nearly all HNW individuals in the UAE are board members 13
  • 2.2. Expats account for almost three quarters of the local HNW population 13
  • 2.2.1. Visas are designed to encourage immigration 14
  • 2.2.2. India is the largest feeder country for HNW expats 15
  • 2.2.3. NRIs are targeted extensively by Indian and Arabic banks in the UAE 15
  • 2.2.4. Welch & Ellis targets UK expats in Dubai 16
  • 3. EMIRATI HNW INVESTMENT STYLE PREFERENCES 18
  • 3.1. A lack of expertise drives advisory mandates 18
  • 3.1.1. The largest proportion of HNW wealth is in advisory mandates 18
  • 3.1.2. Wealth managers should highlight their specialist expertise 19
  • 3.1.3. UAE HNW investors place just over half of their managed wealth with their main wealth manager 20
  • 3.2. Emirati HNW investors' lack of time is driving uptake of discretionary mandates 21
  • 3.2.1. But demand is strongest for advisory mandates 21
  • 3.2.2. Advisory mandates will remain the favored asset management service 22
  • 3.2.3. A reluctance to give up control is driving demand for advisory mandates 23
  • 3.2.4. Emirati HNW investors who self-direct lack trust in wealth managers 24
  • 4. UNDERSTANDING ASSET ALLOCATION TRENDS AMONG EMIRATI HNW INDIVIDUALS 26
  • 4.1. Bonds and property are the leading asset classes among UAE investors 26
  • 4.1.1. Bonds dominate the typical HNW portfolio, but cash holdings are forecast to experience the greatest increase in popularity 26
  • 4.1.2. Equity investments only constitute a small proportion of the average Emirati HNW portfolio 27
  • 4.1.3. Asset diversification and capital appreciation opportunities feed HNW appetite for equities 28
  • 4.1.4. Bond investments are forecast to increase amid an uncertain environment 29
  • 4.1.5. Bond holdings are driven by the risk-averse nature of UAE investors 30
  • 4.1.6. Cash and near-cash allocations are above the global average 31
  • 4.1.7. Investors' desire to maintain liquidity drives allocations into deposits 32
  • 4.1.8. Property constitutes almost one third of the typical HNW portfolio 33
  • 4.1.9. Demand for property is likely to decrease 34
  • 4.1.10. Alternatives constitute a meagre percentage of the typical HNW portfolio 35
  • 4.1.11. Asset diversification is the leading driver for investments into alternatives 36
  • 4.1.12. Commodities allocations beat the global average 37
  • 4.1.13. Mashreq offers accounts for those investing in gold 38
  • 4.1.14. Inflation protection is the leading driver for commodity investments 39
  • 5. HNW PRODUCT AND SERVICE DEMAND 41
  • 5.1. Demand for planning services is high in the UAE 41
  • 5.1.1. The high proportion of expats drives demand for planning services 41
  • 5.1.2. A multi-service proposition is key to competing in UAE's HNW market 42
  • 5.1.3. Demand for all planning services is forecast to increase 43
  • 5.1.4. Advisors should develop pension planning services 44
  • 6. APPENDIX 46
  • 6.1. Abbreviations and acronyms 46
  • 6.2. Definitions 46
  • 6.2.1. Affluent 46
  • 6.2.2. HNW 46
  • 6.2.3. Liquid assets 46
  • 6.2.4. Mass affluent 46
  • 6.2.5. Sukuk 46
  • 6.3. Methodology 47
  • 6.3.1. GlobalData's 2016 Global Wealth Managers Survey 47
  • 6.3.2. GlobalData's 2015 Global Wealth Managers Survey 47
  • 6.3.3. Global Data's WealthInsights 47
  • 6.3.4. Exchange rates 48
  • 6.4. Bibliography 48
  • 6.5. Further reading 49

List of Tables

List of Tables

  • Table 1: 2017 Global Entrepreneurship Index rankings 13
  • Table 2: AED to US dollar exchange rate, December 31, 2015 and December 31, 2016 49

List of Figures

List of Figures

  • Figure 1: The bulk of HNW investors in the UAE are males below the age of 60 10
  • Figure 2: Earned income is the main source of wealth for UAE's HNW investors 11
  • Figure 3: Property and real estate are the leading generators of Emirati wealth 12
  • Figure 4: Most HNW investors in the UAE hold board member positions 13
  • Figure 5: 74.6% of the UAE's HNW client base is made up by expats 14
  • Figure 6: Almost half of the UAE's HNW expats are from India 15
  • Figure 7: Axis Bank Private Banking UAE targets wealthy NRI expats 16
  • Figure 8: Welch & Ellis offers advisory services to UK expats 17
  • Figure 9: UAE wealth managers should lead with advisory mandates 19
  • Figure 10: A lack of expertise is the major driver of demand for wealth management services 20
  • Figure 11: The vast majority of UAE HNW investors use more than one advisor 21
  • Figure 12: HNW demand is particularly high for advisory services 22
  • Figure 13: Advisory asset management will experience the highest increase in demand 23
  • Figure 14: HNW investors in the UAE are reluctant to relinquish control 24
  • Figure 15: Wealth managers should advertise the right products to offset self-directing trends 25
  • Figure 16: Emirati HNW investor portfolios are dominated by bonds 27
  • Figure 17: Most investments are held in funds 28
  • Figure 18: Equities growth will be driven by asset diversification opportunities 29
  • Figure 19: Bonds constitute a sizable portion of HNW portfolios 30
  • Figure 20: Bond investments are forecast to increase further 31
  • Figure 21: Cash and near-cash allocations are higher in the UAE than globally 32
  • Figure 22: A desire to maintain liquidity will drive cash and near-cash investments growth 33
  • Figure 23: Property funds are significantly more popular than direct investments 34
  • Figure 24: Property investments are forecast to decrease 35
  • Figure 25: Structured products are the most popular alternatives investment 36
  • Figure 26: A large number of industry experts expect alternative investments to increase 37
  • Figure 27: UAE HNW investors' commodity allocations are mostly into funds 38
  • Figure 28: Gold Edge is designed for individuals who want to invest in gold 39
  • Figure 29: Commodity investments will stagnate over the next year 40
  • Figure 30: Financial planning is the priority for UAE HNW investors 42
  • Figure 31: Mondial Dubai offers inheritance advice to its expat clients 43
  • Figure 33: Financial planning will experience the highest growth in demand 44
  • Figure 32: Credence offers pension advice to its UK client base 45
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