The Middle East witnessed one of the biggest growth in high net worth individuals (HNWIs) population which surged by 10.4 per cent to 440,000, and their combined wealth increasing by 12.5 per cent to $1.7 trillion, said a report.

The region was second in the HNWI growth rates after Africa, according to the 15th annual World Wealth Report released by Merrill Lynch Global Wealth Management and Capgemini on Wednesday.

Commenting on the record growth, Tamer Rashad, head of ME, Merrill Lynch Wealth Management said the past few years have seen great fluctuations in HNWI wealth and population.

“In 2010, we saw growth rates slow down from the higher double-digit levels of 2009 when many markets were quickly returning from significant crisis-related losses.”

'At the end of 2010, the number of HNWIs grew in Saudi Arabia and Bahrain but declined marginally in the UAE. Saudi Arabia had 113,300 HNWIs in 2010, an increase of 8.2 per cent from 2009,' Rashad pointed out.

'In Bahrain, there were 6,700 HNWIs in 2010, up 24 per cent from 2009. Whilst in the UAE, the HNWI population declined by only 3.5 per cent to 52,600 in 2010, in contrast to the larger decline of 18.8 percent in 2009,' he added.

On the global scale, the HNWIs expanded in population and wealth last year surpassing the 2007 pre-crisis levels in nearly every region, said the report.

The global HNWI population and wealth growth hit more stable levels in 2010, with their population increasing 8.3 per cent to 10.9 million and HNWI financial wealth growing 9.7 per cent to reach $42.7 trillion (compared to 17.1 and 18.9 per cent in 2009).

The global population of Ultra-HNWIs  grew by 10.2 percent in 2010 and its wealth by 11.5 percent, the report pointed out.

The global HNWI population remained highly concentrated in the US, Japan and Germany, which together accounted for 53 per cent of the world's HNWIs.

The US is still home to the single largest HNW segment in the world, with its 3.1 million HNWIs accounting for 28.6 percent of the global HNWI population.
   
“While over half of the global HNWI population still resides in the top three countries, the concentration of HNWIs is fragmenting very gradually over time,” said Karthikeyan Rajendran, sales director, Middle East, Global Financial Services, Capgemini.

“The concentration of HNWIs among these areas will continue to erode if the HNWI populations of emerging and developing markets continue to grow faster than those of developed markets.”

Asia-Pacific posted the strongest regional rate of HNWI population growth in 2010 among the top three markets.

While HNWI wealth had already overtaken Europe in 2009, Asia-Pacific has now surpassed the Europeans in terms of HNWI population, expanding 9.7 per cent to 3.3 million, while Europe grew 6.3 percent to 3.1 million.

Asia-Pacific HNWIs’ wealth gained 12.1 percent to $10.8 trillion, exceeding Europe’s HNWI wealth of US$10.2 trillion, where the wealth increase was 7.2 percent in 2010. Asia-Pacific is now the second largest region for both HNWI wealth and population, second only to North America.

Also of note in the Asia-Pacific region, India’s HNWI population became the world's twelfth largest in 2010, entering the top 12 for the first time, the report said. 
 
By the end of 2010, HNWIs held 33 per cent of all their investments in equities, up from 29 per cent a year earlier. Allocations to cash/deposits dropped to 14 per cent in 2010 from 17 per cent in 2009 and the share held in fixed-income investments dipped to 29 per cent from 31 per cent.

Among alternative investments, many HNWIs favored commodities. Commodity investments accounted for 22 percent of all alternative investments in 2010, up from 16 percent in 2009.

“Global capital markets and major asset classes performed well over the year on the back of rising investor risk appetite,” said Rashad.

“The shift toward equities in 2010 by HNWI investors reflected the search for returns and the desire to recoup more crisis-related losses. We also saw HNWIs continue to favor specific asset classes, such as equities and commodities, based on market opportunity or long-standing preferences,” he added.-TradeArabia News Service