The UAE is well-established as a hub for the super-rich and the introduction of generative AI could create further wealth boom
The UAE’s net wealth hit $2.9tn in 2023, according to Boston Consulting Group’s (BCG) annual global wealth report, Global Wealth Report 2024: The GenAI Era Unfolds.
The UAE’s financial wealth grew by 10 per cent from 2022 to 2023, versus the Middle East and Africa’s 8 per cent.
Global financial wealth rose at 7 per cent, following a decline of 4 per cent in 2022. Over the next five years, an estimated $92tn of financial wealth will be created globally.
UAE financial wealth
Cross-border wealth grew globally by 5.1 per cent in 2023, reaching $13tn, a 1 percentage point increase over the year before. In this evolving landscape, the UAE has emerged as a standout performer.
Currently the world’s seventh-largest booking centre, it is poised to overtake the Channel Islands and the Isle of Man to become the sixth-largest by 2028.
The UAE’s growth rate outpaces traditional European cross-border booking centres like Switzerland, the UK, and Luxembourg, competing with Singapore and the US.
This shift reflects an increasing demand for geographic diversification and the surge in wealth generation across Middle Eastern and Asian markets.
While Switzerland is expected to maintain its position as a leading booking centre, capturing 15 per cent to 20 per cent of global new cross-border wealth through 2028, it will face fierce competition for the top spot, with the UAE as a formidable contender.
Lukasz Rey, Managing Director and Partner, and Head of Financial Institutions in the Middle East, said: “The UAE may become the sixth-largest global booking centre by 2028. This potential ascent highlights the UAE’s growing importance in the international wealth management landscape and its appeal to high-net-worth individuals seeking diverse financial opportunities.
“This projection reflects broader trends in geographic diversification and wealth generation across markets. As the cross-border wealth landscape evolves globally, we anticipate shifts in the relative positions of various booking centres.”
The outlook for the UAE’s financial wealth looks promising. Financial wealth increased by 7.6 per cent annually from 2018 to 2023, reaching $1tn in 2023.
Projections suggest that this growth will continue at an annual rate of 7.3 per cent, reaching $1.5tn by 2028. Real assets have achieved dynamic growth by 9.1 per cent annually from 2018 to 2023 and are expected to grow at 8.5 per cent annually to reach $3.1tn by 2028.
Liabilities have remained roughly still at $180bn and are projected to stay in the same range, reaching $240bn by 2028. The UAE’s net wealth, which includes financial wealth, real assets, and liabilities, is expected to increase from $2.9tn in 2023 to $4.4tn by 2028.
The financial wealth landscape of the UAE is characterized by a significant concentration of Ultra High Net Worth (UHNW) individuals. Individuals with assets exceeding $100m make up 29 per cent of the UAE’s total financial wealth, more than double the global average of 14 per cent for the same wealth segment.
This substantial share held by UHNW individuals in the UAE exceeds the global figure and the broader Middle East & Africa region’s 23 per cent. It underscores the UAE’s increasing prominence as a hub for high-net-worth individuals.
Mohammad Khan, Managing Director and Partner at BCG, said: “In the UAE market, where 81 per cent of financial wealth is investable—a number expected to climb to 83 per cent by 2028—wealth managers are staring at a massive opportunity.
“Given that 41 per cent of onshore assets are in cash, there’s a clear need for wealth players to provide tailored solutions and target underserved segments. This includes providing customers with access to integrated offerings such as advisory, lending products, and alternative investments catering to customers’ holistic needs.
“We will also see a greater focus by leading players in the GCC to position themselves with younger customers through greater use of digital platforms and a differentiated customer engagement model as wealth is transitioned to the next generation.”
GenAI is set to significantly change the wealth management industry, offering ways to improve client experience and increase efficiency across the value chain. The technology shows potential in client acquisition, onboarding, servicing, and internal support.
GenAI applications can assist in creating personalised pitch documents, speeding up know-your-customer (KYC) processes, providing instant client support through chatbots, and improving transaction monitoring by reducing false positives.
Despite the potential benefits, many wealth managers are still in the early stages of GenAI adoption. While 85 per cent of surveyed financial institutions believe GenAI will be highly impactful, 82 per cent lack an overarching, long-term GenAI strategy and short-term implementation roadmaps.
Source: www.arabianbusiness.com
