GCC HNWIs are more positive about the economic situation in the Gulf region than globally, with 55% saying the economic situation in the Gulf is improving compared to 31% saying the global economy is improving, according to Emirates Investment Bank’s (EIBank) second ‘GCC Wealth Insight Report’.
The GCC Wealth Insight Report 2015 is based on a survey of HNWIs from the United Arab Emirates, Qatar, Kuwait, Saudi Arabia, Oman and Bahrain. The survey was undertaken in the fourth quarter of 2014, a period that recorded the start of falling oil prices, but did not capture the lowest levels. Hence, the views expressed in this Report are balanced and were not affected by the uncertainty in the markets following the drop in oil prices.
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For the purposes of this study, HNWIs are defined as individuals with US$2 million or more in investable assets.
Key findings
Respondents were more cautious towards the global economy compared to last year, with the view that the global economic situation is worsening almost doubling (29%) on last year (16%). Nonetheless, the Report’s findings were optimistic about the longer-term prospects for both the Gulf region and the global economy; 86% say they are very or somewhat optimistic about prospects for the Gulf region over the next five years with 78% saying the same thing for the global economy.
The more cautious approach to the global economy taken by regional HNWIs is matched by an increasing preference to keep assets closer to home, which has risen 19 percentage points since last year to 83%. Those who prefer to keep assets closer to home are most likely to say the main reasons are confidence in the stability of their local economy (39%) and a desire to have greater personal control over their investments (20%).
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By GlobalDataRegional HNWIs are also more likely to have a local rather than international bank to help manage their wealth compared to last year, with 80% saying they prefer to use a local bank compared to 59% last year. Respondents said they believe that local banks provide easier access, have a better understanding of the local market or regulations, and are safer. The top four factors for selecting a local bank have not changed since last year – HNWIs look for level of service, bank reputation and brand, fees and pricing, and investment expertise and global access.
Philanthropy has also featured prominently in GCC countries in this year’s survey, with 86% of respondents saying they dedicate a portion of their wealth to charitable giving, mostly to humanitarian charitable causes. 60% of those HNWIs who currently allocate a portion of their wealth to charity are planning to increase their distribution to charity in the near future.
Commenting on the findings of the Report, Khaled Sifri, CEO of Emirates Investment Bank, said: "Following the success last year of the inaugural GCC Wealth Insight Report with investors and other members of the investment community, I am pleased to present the second edition of the annual Report, which is derived from the voices of wealthy business people and professionals based in the Gulf. From these individuals we have gathered independent and rich data providing a unique insight into views on prospects for the Gulf and global economies, investment behaviour and how these have changed over the past year.
"While views of the global economy are more negative than last year, with respondents in this year’s survey almost twice as likely to say the situation is worsening, HNWIs are keen to continue growing their wealth and remain optimistic about future prospects globally and in the Gulf region in particular. There are strong signs of moving beyond the days of the financial crisis, albeit with a more cautious and perhaps more regional investment approach. We believe that the continued growth-focused attitude of regional entrepreneurs reinforces the positive outlook for the GCC region and global economy in the coming years.
"As a private and investment bank dedicated to growing and safeguarding wealth, we are delighted to continue leading the conversation on wealth management in the GCC through vehicles such as the GCC Wealth Insight Report."
Report highlights
Current and Future Economic Sentiment
- GCC HNWIs are still more positive about the economic situation in the Gulf region than globally, with 55% saying the economic situation is improving compared to 31% saying the global economic situation is improving (2014: 57% and 30%)
- GCC HNWIs are more optimistic on the prospects for the Gulf region over the next five years (86%) than for the global economy over the same period (78%)
- HNWIs in the UAE (89%), Qatar (83%) and Oman (75%) are the most optimistic among the GCC countries about the prospects of their economies
Attitudes towards Banking and Investment Decisions
Just over a quarter of GCC HNWIs (28%) have had their banking and investment decisions affected by the global economic situation; compared to (66%) last year
- GCC HNWIs are now less affected by local economic conditions (33%) in their banking and investment decisions; compared to (43%) last year. A quarter of those affected attributed the reason to the geopolitical situation in the Arab region
- Geographic preferences
- GCC HNWIs (83%) are more likely than last year (64%) to say they prefer to invest in assets closer to home due their confidence in their local economy’s stability and security (39%) and ability to control and oversee their investments easily (20%)
- GCC HNWIs who invest globally (18%) do so mainly to take advantage of global opportunities (44%) or diversify their risk (44%)
- In the next 3-5 years, global investors from the GCC are expected to be regionally focused, with 29% seeing the GCC as their best investment destination
Investment tools
- GCC HNWIs still prefer to invest their wealth in their own businesses (33%) and in real estate (30%); almost same as last year (34% and 25% respectively) rather than stocks and bonds
- Eight in ten expect to increase investments in real estate (81%) and two thirds expect to increase investment in their own business (64%) in the near future; compared to 65% and 65% respectively last year
- A large majority of GCC HNWIs (84% this year and 90% last year) are persistently more focused on growing than preserving their wealth
Charitable giving
- Nine in ten (86%) GCC HNWIs currently allocate a portion of their wealth to charitable giving with the main focus on humanitarian causes, healthcare and education
- 60% of GCC HNWIs are planning to increase their distribution to charity in the near future, with the rest planning to keep it at the same levels
Choosing a Banking Partner
- Most of respondents (80%) prefer to have a local rather than international bank to help manage their wealth as they believe that local banks provide easier access, better understanding of the local market or regulations, and are safer
- Level of service, brand and reputation, and fees are still rated the most important factors in selecting a local banking partner
