Barclays Insights

Route to prosperityhas never been faster, say Middle East’s wealthy:

-60 percent of high net worth individuals (HNWIs) in the Middle East believe wealth creation is faster today than in the past, more than any other region globally, according to latest edition of Barclays Wealth Insights

-54 percent of Middle Eastern HNWI’s state that personal investments contributed the most to their overall wealth

-50 percent of Middle Eastern HNWIs concluded their level of wealth had increased in the recent economic downturn

High net worth individuals in the Middle East are more confident about the increasing speed of wealth creation than those in any other market, the latest report in the Barclays Wealth Insights series reveals. Over half (60 percent) of respondents in the Middle East agreed that wealth can be created faster today than in the past, in comparison to 43 percent in Europe and 31 percent in North America. Interestingly, over half (54 percent) of Middle Eastern respondents stated that personal investments have contributed largely to their overall wealth portfolio, compared to other sources of income such as inheritance at 49 percent.

Half (50 percent)of Middle East respondents statedthat their level of wealth increased in the recent financial turmoil, substantiating that MENA HNWIs tend to have a more positive view of setbacks andare more persistence in overcoming adversity. This is in line with findings from the 16th Volume of Wealth Insights which found that 45 percentHNWIs in the Middle East agreed that the recent crisis has provided them with opportunities.

In the rapid growth economies of the Middle East, nearly three quarters (73 percent) of respondents have accumulated the majority of their wealth in less than 20 years. In terms of how this wealth is used, HNWIs in the Middle East have a tendency to allocate more of their resources to personal property than to tangible assets and collectibles. On average, respondents in the region currently hold their wealth largely in personal property (30 percent of wealth), followed by investments (23 percent) and cash savings (20 percent). By contrast, just 13 percent of wealth is held in tangible assets.

From source to legacy

As wealth rises and fortunes are made at a more rapid rate than ever before, the report explores how the challenges facing newly wealthy individuals - and families that needto plan for the future - have become more acute.

ManyHNWIs around the world now prefer to give their money to family and friends and charitable causes in their lifetime rather than as inheritance, seeing their wealth as an ‘enabler’, the report revealed. This trend is especially prevalent in the Middle Eastwith 19 percent of HNWIs planning to give their entire wealth away to family, friends and charity during their lifetime, compared to just 5 percent in the UK and 4 percent in the US. Across the Middle East, 96 percent of respondents indicated their intention to pass on some or all of their wealth to family or friends, either during their lifetime or as inheritance.

Rory Gilbert, Managing Director and Head of Wealth and Investment Management, Barclays, Middle East and North Africa, said, “Wealth creators in newer growth markets profoundly see their money as an enabler for their family and to the wider wealth cycle. They want to pass their wealth down and leave their business as a legacy for future generations.The report reveals that wealthy families in the Middle East have a strong entrepreneurial spirit and want to play an active role in managing their money, and have great confidence in the future of the region.”

Impact on philanthropy

In addition to the legacy left behind, the report finds that the changing origin of wealth has a profound impact on the motivations forglobal HNWIs to become involved in philanthropy.  In the Middle East, HNWIs tend to give to charitable causes out of a sense of duty and responsibility (65 percent )as well as religious beliefs (60 percent). The former is echoed in other markets, with this being the case for 69 percent of respondents in the UK and Switzerland, 71 percent in the US and 84 percentin Monaco.

He further added:“We expect significant growth in family offices to occur in MENA, as HNWIs in the region that have gained their wealth over the last few decades look to come up with ways to pass it on to the next generation. Entrepreneurial activity still drives the vast majority of wealth creation in MENA, whichis earned through the success and growth of business ventures. Even when MENA HNWIs received a large portion of their wealth from inheritance, theyare actively involved in growing that financial legacy. In this respect, Middle Eastern HNWIs are the most optimistic among all the regions surveyed, and believe that wealth creation is easier at present than ever before. Not only is the Middle East the hotbed for creating wealth, but is also attracting global HNWI investments, that are seeking stable growth opportunities.”

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