Gulf's wealthy happy with assests nearer home
Dubai, March 19, 2014
Majority of the high networth individuals (HNWIs) in the GCC region are likley to invest in assets closer to home rather than globally mainly due to their confidence in the local economy, said a study.
Globally, these super rich investors prefer the UAE, China and Europe as the favourite investment destinations over the next three to five years, stated the Emirates Investment Bank in its first “GCC Wealth Insight Report.”
For the purposes of this study, the Dubai-based Emirates Investment Bank has defined HNWIs as individuals with $2 million or more in investable assets. This survey was undertaken in the last quarter of 2013, a time when the GCC was widely recognised as the standout emerging/frontier market.
According to the survey, most of the HNWIs (87 per cent) are more optimistic on the prospects for the Gulf region over the next five years than for the global economy over the same period (75 per cent)
With more infrastructure spending and higher consumer confidence across the GCC, the GDP growth is forecast for the region to grow by 3.7 per cent in 2013 and 4.1 per cent in 2014, said the Dubai-based bank in its report.
The survey found that more than half (54 per cent) HNWIs think the current condition of the global economic situation will stay the same, while about 46 per cent believe it will improve in one year.
Interestingly, these HNWIs are nearly twice as likely to say the economic situation is improving in the Gulf (56 per cent) than globally (30 per cent).
The study also found that GCC HNWIs who invest globally do so mainly to seek greater stability from developed markets (24 per cent) or want to diversify risk (24 per cent).
On the attitudes towards banking and investment decisions, the Emirates Investment Bank said more GCC HNWIs (66 per cent) agreed that their banking and investment decisions got affected by the global downturn rather than the local economic conditions (43 per cent) or the Arab Spring and events that followed (46 per cent)
Out of those who have been affected by the global downturn, 38 per cent are now more conscious and cautious of the risks related to their investments, 21 per cent have restricted or reduced their global investment activities and 13 per cent have focused on investments in the Gulf region, the study found.
Half (49 per cent) of those who have had their investments affected by the Arab Spring are now hesitant to make new investments in affected countries, though views on regional investments depend on the country being considered, it added.
When asked about the financial allocation decisions, majority of GCC HNWIs (about 90 per cent) said they were more focused on wealth generation than preservation.
According to the study, most HNWIs spread their current wealth across a range of investments with 34 per cent allocating wealth in their own businesses and 25 per cent pump in funds into real estate as an investment.
Two thirds expect to increase investments into their own business (65 per cent) and real estate (65 per cent) in the near future, it added.
On choosing a banking partner, more than half (59 per cent) of respondents said they prefer a local bank to help manage their wealth. For them, the top priorities are level of service, brand and reputation, and fees in selecting a local banking partner, stated Emirates Investment Bank in its report.
Commenting on report, Khaled Sifri, CEO of Emirates Investment Bank, said: "Among the Gulf’s wealthy, there is a healthy balance of caution as well as optimism. As a private and investment bank dedicated to growing and safeguarding wealth, we are committed to further developing the wealth management sector in the GCC."
"The findings of this inaugural report offer insight into how wealthy entrepreneurs, executives and professionals based in the Gulf make important investment decisions," he added.
The report found that a large majority (84 per cent) find investment banking advisory services important for managing their investment. About 61 per cent prefer to use separate banks to manage personal wealth and business banking, it added.
Sifri said Emirates Investment Bank's focus is on thoroughly understanding each client’s unique needs and designing a wealth strategy that is tailor-made to meet them.
"We understand that one size does not fit all. This survey embodies the varying characteristics, commonalities and differences of views among a truly unique cross-section of society,” he added.
The GCC Wealth Insight Report 2014 is based on a survey of HNWIs from the GCC countries.
The objective behind creating this report is to better understand the views of high net worth individuals (HNWIs) across the Gulf on both local and global economic sentiment, financial drivers, opportunities and challenges as well as factors that impact both wealth and financial decision-making in regards to banking and investments.
Emirates Investment Bank commissioned this report and partnered with Ipsos, a leading market research company and Brunswick Insight, which focuses on using opinion research to help clients better understand their relationships with stakeholders and communicate more effectively.-TradeArabia News Service