The Gulf Cooperation Council (GCC) financial wealth will experience a sturdy Compound Annual Growth Rate (CAGR) of 5.2% in new wealth, rising from $2.7 trillion to a high of $3.5 trillion from 2021 – 2026, the Boston Consulting Group (BCG) said.
In its new report entitled “Global Wealth 2022: Standing Still Is Not an Option,’ BCG said equities and investment funds in the GCC make up the largest asset class at 53% of total personal wealth in 2021, seconded by currency and deposits capped at 38%.
Whereas bonds make up a mere 2% of total personal wealth, it is expected this asset class will grow the fastest with a CAGR of 7.7% by 2026. It is also expected that life insurance and pensions will become the third largest asset class over the next five years.
“We see the Middle East and Africa financial wealth growing year after year, with the GCC in particular, excelling, despite a tremulous global market. In fact, the GCC alone represented 38% of the Middle East and Africa’s financial wealth in 2021, having grown 5% every year since 2016 to USD 2.7 trillion, with an exceptional 9% value at the peak of the COVID-19 pandemic between 2020 to 2021,” said Mustafa Bosca, Managing Director and Partner, BCG.
In 2021, approximately 30% of the GCC’s wealth was derived from Ultra High Net Worth (HNW) individuals who are worth more than USD 100 million, with this expected to grow to 32% in 2026. Individuals with wealth ranging above USD 1 million held 30% of the region’s wealth in 2021 and is expected to remain the same by 2026.
Coming to the UAE, the financial wealth is expected to grow, rising from $700 billion at present to $1 trillion by 2026, at a Compound Annual Growth Rate (CAGR) of 6.7% in new wealth. Equities and investment funds in the Emirates will make up the largest asset class at 64% of total personal wealth in 2021 and are by 2026 expected to grow the fastest with a CAGR of 8.8%.
Currency and deposits represent the second largest class at 29% of total personal wealth in 2021 and bonds make up a mere 3%. The life insurance and pensions are expected to become the fourth largest asset class over the next five years.
In 2021, approximately 41% of the UAE’s wealth derived from Ultra High Net Worth individuals (UNWHIs) who are worth more than $100 million, are expected to grow to 43% in 2026, whereas individuals with wealth ranging above $1 million held 28% of the UAE’s wealth in 2021 and is expected to remain the same by 2026.
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