Fast cars, designer clothes and flashy lifestyles are nothing new to the Middle East. Record high oil prices have been boosting regional wealth for years and none more so than in Saudi Arabia, which was last week recognised as having the world’s highest proportion of ultra high net worth (UHNW) households.
Every eighteen households per 100,000 in Saudi Arabia have more than $100m of assets under management, The Boston Consulting Group (BCG) said in its annual report on global wealth. The world’s largest oil exporter topped households in Switzerland (ten households) and Hong Kong (nine households) in this year’s list. Saudi Arabia isn’t alone. Three other Gulf states, Kuwait, Qatar and the UAE, all appear in the top ten, ranked at fourth, seven and tenth in the world, respectively. Not to be left in the shadows is the region’s millionaire households or those with assets of $1m or more. Qatar has the world’s third highest concentration of millionaires by market share, behind Singapore and Switzerland, while Kuwait and the UAE come in at fifth and six, respectively.
“Given the demographics and overall wealth of these petroleum-rich countries we would expect a higher proportion of UHNW households than in other parts of the world. Growth in assets under management also reflects the strong fundamentals of the region, driven by continuing strong petroleum prices,” says Dr Sven-Olaf Vathje, partner and managing director at The Boston Consulting Group, Middle East.
Gulf states weren’t the only countries that saw their assets under management swell in size. Global wealth increased eight percent to $121.8 trillion in 2010 with the strongest growth in Asia Pacific (excluding Japan) and the Middle East and Africa, according to BCG.
The USA topped this year list for number of households with more than $100m of assets under management (2,692) as well as the highest proportion of millionaire households in the world (5,220). In 2010, Japan ranked second in terms of millionaires per 1,000 households while Germany came in second in terms of number UHNW households globally.
If this year’s wealth report is anything to go by, the economic downturn — at least for the super rich — was just a blip. Global assets are set to increase at a compound rate of six percent over the next several years as most economies move out of recession and emerging markets ramp up their infrastructure spending plans.
Wealth in the Middle East and Africa is expected to reach $6.7 trillion by 2015, says BGC. The Gulf’s aggressive economic plans coupled with its vast oil wealth are expected to be the two biggest drivers of household wealth. Oil prices, the backbone of the Gulf’s economy, have increased over 54 percent to $114 a barrel in the last year, in spite of a small decline in April due to the political turmoil.
Large family-owned conglomerates — some of the biggest employers in the region — are set to become the biggest beneficiaries of government spending sprees, predicts Markus Massi, partner and managing director of The Boston Consulting Group, Middle East. “The underlying economic development — meaning all of the investment with the government that has already started — [will be a driver]. Most of the HNWI have private corporations, which obviously will benefit from that investment activity so a lot of the wealth will be created through economic development,” he explains.
Female wealth, which accounted for 22 percent of the assets under management in the Middle East last year, is significant, says BGC. Female investors in the region ranked fifth globally in terms of wealth, holding around $0.7 trillion in assets under management and not far behind their counterparts in North America (where women hold 33 percent of the total wealth), Australia and New Zealand (31 percent), Asia (29 percent) and Western Europe (26 percent).
The majority of this female wealth might be the result of family ties but that certainly doesn’t mean women are resting on their laurels. Wealthy Middle Eastern women are particularly savvy when it comes to structuring their investment portfolios, often choosing to take on a greater role with their wealth managers than their male counterparts, says Massi.