Personal wealth has risen for ME's richest

Personal wealth, despite global crisis

There is no denying the continuing effects of the economic crisis the whole world over, but it seems as though the richest people have managed to free themselves from its constraints faster than any other group, and the personal wealth of individuals in the Middle East is at the forefront of this trend.

According to the 14th annual World Wealth Report, compiled by Capgemini and Merrill Lynch, in 2009 the global population of high net worth individuals (HNW1s) grew 17.1 percent to 10 million, thereby restoring the levels that were in place in 2007, before the financial crisis began.

Asia has pioneered the trend, and for the first time in history, the Asia-Pacific region has as many HNW1s as Europe. And in the Middle East, the HNW1 population has grown bigger and at greater speed than analysts predicted. Indeed, the number of high net worth individuals in the Middle East grew by 7.1 percent in 2009 and their combined wealth rose by 5.1 percent to US$1.5 trillion, reported Gulf News.     

Sallie Krawcheck, President of Global Wealth and Investment Management at the Bank of America, along with Bertrand Lavayssiere, MD of Capgemini's Global Financial Services, wrote a joint note, introducing the World Wealth Report and said that "the last couple of years have been momentous for wealthy investors and their advisors".

"The HNWI population itself has started growing again and HNWI wealth is also recovering," wrote Ms. Krawcheck and Mr. Lavayssiere. "But it is clear from HNWIs' asset allocations that they are taking a cautious approach to investing and risk-taking. Moreover, it seems the lessons learned from the crisis have changed the way HNW clients will think about investing for the foreseeable future."

Clients now, according to Ms. Krawcheck and Mr. Lavayssiere, are becoming more educated and involved in the management of their investments and are taking more of a hands-on approach with the choices being made in their companies.

Distribution of wealth in the ME

The total HNW1 population in the Middle East grew to 400,000, although this growth in personal wealth did not occur equally across all countries in the region.

In Saudi Arabia, the number of HNW1s increased by 14.3 percent and reached 104,700 by the end of last year. Bahrain also experienced positive growth and during the ssame period, the HNW1 population rose by 7.2 percent to 5,400.

Individuals in the UAE, however, were not so fortunate and there was a continuing decline in personal wealth in this region. The HNW1 population fell to 54,500 - a drop of 18.8 percent - and, according to Gulf News, this was a result of "unprecedented market conditions."

Amir Sadr, Head of Middle East at Merrill Lynch Wealth Management, said: "Compared to many of the global economies, the UAE saw a larger pullback due to debt concerns. We did not see a sovereign-level crisis of this magnitude in any of our global markets."

The World Wealth Report drew attention to a number of factors leading to this decrease in personal wealth in the UAE, including lessening oil production and declining real estate value. 

However, according to the Boston Consulting Group (BCG), the UAE has one of the six densest millionaire populations in the world. In fact, the BCG said that three of the six were in the Middle East - as well as the UAE, Kuwait and Qatar are believed by the BCG to have the densest millionaire populations.

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