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Wealth in the UAE: HNW Investors 2017

Wealth in the UAE: HNW Investors 2017

Summary

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.0
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.


  • Executive Summary
    • HNW individuals are typically expats and have sourced their wealth either through earned income or family business ownership
    • Key findings
    • Critical success factors
  • Profiling the Emirati HNW Investor
    • Earned income remains the largest source of wealth
      • The bulk of Emirati HNW individuals are male and below 60 years of age
        • Table Figure 1: The bulk of HNW investors in the UAE are males below the age of 60
      • Earned income is the leading source of Emirati HNW wealth
        • Table Figure 2: Earned income is the main source of wealth for UAE's HNW investors
      • Many HNW investors have built their fortunes through property and real estate
        • Table Figure 3: Property and real estate are the leading generators of Emirati wealth
        • Table 2017 Global Entrepreneurship Index rankings
      • Nearly all HNW individuals in the UAE are board members
        • Table Figure 4: Most HNW investors in the UAE hold board member positions
    • Expats account for almost three quarters of the local HNW population
      • Visas are designed to encourage immigration
        • Table Figure 5: 74.6% of the UAE's HNW client base is made up by expats
      • India is the largest feeder country for HNW expats
        • Table Figure 6: Almost half of the UAE's HNW expats are from India
      • NRIs are targeted extensively by Indian and Arabic banks in the UAE
        • Table Figure 7: Axis Bank Private Banking UAE targets wealthy NRI expats
      • Welch & Ellis targets UK expats in Dubai
        • Table Figure 8: Welch & Ellis offers advisory services to UK expats
  • Emirati HNW Investment Style Preferences
    • A lack of expertise drives advisory mandates
      • The largest proportion of HNW wealth is in advisory mandates
        • Table Figure 9: UAE wealth managers should lead with advisory mandates
      • Wealth managers should highlight their specialist expertise
        • Table Figure 10: A lack of expertise is the major driver of demand for wealth management services
      • UAE HNW investors place just over half of their managed wealth with their main wealth manager
        • Table Figure 11: The vast majority of UAE HNW investors use more than one advisor
    • Emirati HNW investors' lack of time is driving uptake of discretionary mandates
      • But demand is strongest for advisory mandates
        • Table Figure 12: HNW demand is particularly high for advisory services
      • Advisory mandates will remain the favored asset management service
        • Table Figure 13: Advisory asset management will experience the highest increase in demand
      • A reluctance to give up control is driving demand for advisory mandates
        • Table Figure 14: HNW investors in the UAE are reluctant to relinquish control
      • Emirati HNW investors who self-direct lack trust in wealth managers
        • Table Figure 15: Wealth managers should advertise the right products to offset self-directing trends
  • Understanding Asset Allocation Trends among Emirati HNW Individuals
    • Bonds and property are the leading asset classes among UAE investors
      • Bonds dominate the typical HNW portfolio, but cash holdings are forecast to experience the greatest increase in popularity
        • Table Figure 16: Emirati HNW investor portfolios are dominated by bonds
      • Equity investments only constitute a small proportion of the average Emirati HNW portfolio
        • Table Figure 17: Most investments are held in funds
      • Asset diversification and capital appreciation opportunities feed HNW appetite for equities
        • Table Figure 18: Equities growth will be driven by asset diversification opportunities
      • Bond investments are forecast to increase amid an uncertain environment
        • Table Figure 19: Bonds constitute a sizable portion of HNW portfolios
      • Bond holdings are driven by the risk-averse nature of UAE investors
        • Table Figure 20: Bond investments are forecast to increase further
      • Cash and near-cash allocations are above the global average
        • Table Figure 21: Cash and near-cash allocations are higher in the UAE than globally
      • Investors' desire to maintain liquidity drives allocations into deposits
        • Table Figure 22: A desire to maintain liquidity will drive cash and near-cash investments growth
      • Property constitutes almost one third of the typical HNW portfolio
        • Table Figure 23: Property funds are significantly more popular than direct investments
      • Demand for property is likely to decrease
        • Table Figure 24: Property investments are forecast to decrease
      • Alternatives constitute a meagre percentage of the typical HNW portfolio
        • Table Figure 25: Structured products are the most popular alternatives investment
      • Asset diversification is the leading driver for investments into alternatives
        • Table Figure 26: A large number of industry experts expect alternative investments to increase
      • Commodities allocations beat the global average
        • Table Figure 27: UAE HNW investors' commodity allocations are mostly into funds
      • Mashreq offers accounts for those investing in gold
        • Table Figure 28: Gold Edge is designed for individuals who want to invest in gold
      • Inflation protection is the leading driver for commodity investments
        • Table Figure 29: Commodity investments will stagnate over the next year
  • HNW Product and Service Demand
    • Demand for planning services is high in the UAE
      • The high proportion of expats drives demand for planning services
        • Table Figure 30: Financial planning is the priority for UAE HNW investors
      • A multi-service proposition is key to competing in UAE's HNW market
        • Table Figure 31: Mondial Dubai offers inheritance advice to its expat clients
      • Demand for all planning services is forecast to increase
        • Table Figure 32: Financial planning will experience the highest growth in demand
      • Advisors should develop pension planning services
        • Table Figure 33: Credence offers pension advice to its UK client base
  • Appendix
    • Abbreviations and acronyms
    • Definitions
      • Affluent
      • HNW
      • Liquid assets
      • Mass affluent
      • Sukuk
    • Methodology
      • GlobalData's 2016 Global Wealth Managers Survey
      • GlobalData's 2015 Global Wealth Managers Survey
      • Global Data's WealthInsights
      • Exchange rates
        • Table AED to US dollar exchange rate, December 31, 2015 and December 31, 2016
    • Bibliography
    • Further reading

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