Financial growth, a coming generational wealth transfer, and an influx of high-net-worth individuals is solidifying the region’s appeal as a fortune hub.
Already one of the wealthiest regions in the world, the Gulf Cooperation Council states are solidifying their status as a hub for global fortunes. According to Boston Consulting Group, the region’s financial wealth is expected to grow by 4.7% annually by 2027, reaching $3.5 trillion, up from $2.8 trillion in 2022.
“While global growth overall is moderate, the GCC is one of the fastest-growing regions and stands at the forefront of global wealth accumulation,” says Abdulla Al-Sada, senior executive vice president of QNB Group Asset and Wealth Management, a unit of Qatar-based QNB Group, the MENA region’s biggest financial institution by assets and the first lender to have established private banking in the emirate. “We are working on an ongoing basis to further enhance and uplift our holistic wealth management offering for our sophisticated and demanding clientele.”
For private wealth managers, the region offers attractive opportunities. The GCC already hosts hundreds of private banks, asset management firms, and family offices, including global leaders like Edmond de Rothschild, Goldman Sachs, and BlackRock. Each month, new firms enter the market.
In December, Farro Capital established a presence in Dubai’s International Financial Center (DIFC). For Rajiv Garg, senior executive officer of the Singapore-based multi-family office, expanding into the Middle East was a “no-brainer,” as “the region’s family office market is projected to exceed $1 trillion by 2026” and offers “a perfect blend of traditional wealth as well as newly minted billionaires and unicorn founders.”
Old Money
In the past, local entrepreneurs and families typically sent their money to private banks in Switzerland or Luxembourg for safekeeping. According to a recent report by Strategy&, the global strategy consulting arm of PwC, over 70% of the region’s private wealth is currently held in offshore accounts. But today, GCC clients have a new priority: passing wealth to the next generation.
“In recent years, we’ve see a paradigm shift with the increasing importance of generational wealth transfer, tech entrepreneurs and family offices, especially in the United Arab Emirates and Saudi Arabia,” says Antoine Chemali, CEO of BNP Paribas Wealth Management Middle East, who has been working with the region’s families since the 1970s.
By 2030, an estimated $1 trillion of assets is expected to change hands in the Middle East. Local legislation has evolved to facilitate this process. For many GCC families, which have amassed vast fortunes primarily from oil and gas over less than a century, this will be the first major generational wealth transfer. For asset managers, it is a chance to offer custom-made services.
“We see ourselves as an extension of these families, where we act as their de facto family office with full-service offerings,” says Garg. The goal is to redefine the way families manage their wealth, enter their trusted inner circle, and “guide them in preserving and compounding their assets for generations to come.”
Industry experts anticipate that the new generation will bring a different set of goals to the task than their forebears.
“They will expect innovative financial solutions, digital instruments, sustainable wealth management solutions, and diversified investment products across asset classes globally,” says Sana Al-Hadlaq, senior executive director of Wealth Management at Kuwait’s Kamco Invest, one of the largest asset managers in the region with over $16 billion assets under management. “They expect their wealth managers and institutions to provide them with global reach and access across different markets and asset classes. Investments should comprise all asset classes, including alternative investments with superior returns along the dimensions of private equity, venture capital, and real estate,” says QNB’s Al-Sada.
While reaching across the planet, these younger clients will also be keeping much more money at home.
“International investment remains attractive, but there is a growing trend of these clients retaining a more significant portion of their assets in the region,” says Michel Longhini, group head of Global Private Banking at First Abu Dhabi Bank, the UAE’s largest bank. “This trend has been one of the key drivers of growth and diversification of private wealth management in the UAE and the GCC countries as governments have introduced more robust regulatory frameworks and initiatives to encourage the establishment of local investment companies.”
PwC forecasts the regional wealth management industry growing faster than the global average, reaching $500 billion in onshore assets by 2026, up from $400 billion in 2022, creating significant opportunities for local players to step up their game.
New Money
Besides fortunate heirs, the GCC has also become a destination for the globalized wealthy. According to the Henley Private Wealth Migration Report, the UAE has seen the largest influx of millionaires in the world since the pandemic, drawing 4,000 to 5,000 new residents annually from countries like India, the UK, Pakistan, Nigeria, and China. These migrants seek a safe haven to park their fortunes but also new business opportunities and a luxurious lifestyle, according to Vipul Kapur, head of Private Banking at Mashreq, one of the UAE’s largest private banks.
To attract new high-profile residents, GCC governments have adapted their conservative legal systems, introducing reforms to labor laws, residency programs, golden visas, and new ownership rules for property and businesses.
“The UAE and other GCC countries have implemented regulatory reforms to build a more robust financial environment, draw investment, and unlock their dynamic economies,” says Longhini. In 2023, FAB Private banking reported 14% year-on-year revenue growth and a 22% increase in assets under management, thanks mainly to new client acquisition.
New money is expected to keep flowing into the GCC this year. The UAE’s removal earlier this year from the Financial Action Task Force’s “grey list” of countries working to address deficiencies in their regimes for countering money-laundering and terrorist financing promises to further boost investor confidence. In Saudi Arabia, a policy requiring foreign companies to establish regional headquarters in the kingdom to do business with the government is likely to attract new fortunes eager to tap into the MENA region’s largest market.
Local Lenders Rise To The Challenge
Private wealth and asset management has traditionally been dominated by international financial institutions, but local ones are rising to the challenge, especially in regions where the new wealthy are proliferating. For some, this means forming partnerships.
“We have built strategic alliances with international partners,” says Al-Hadlaq. “We complement the value offered by Western financial institutions by providing them access to the best opportunities and services here.”
Other local managers prefer to compete for the best products and services.
“We need to differentiate through specialized services, customer experience, and innovative solutions,” says Mashreq’s Vipul Kapur. “This means adapting to new technologies, managing security risks and meeting customer expectations for seamless digital experiences.”
Competition fierce in digital products and fintech, where AI is expected to open new horizons.
“This will challenge us to rethink the way we do business and operate,” says QNB’s Al-Sada. “These technologies will transform the entire asset and wealth management industry from the front to the back office, with an emphasis on personalization and increases in productivity.”
With both local fortunes and international client bases growing, the outlook for GCC asset managers that can seize the opportunity is positive. New technologies may even help them catch up with global industry leaders more quickly than anticipated. As regulatory environments continue to evolve, the region is looking forward to a surge in financial innovation, including blockchain technologies and green finance initiatives, further solidifying its role in the global financial ecosystem.
As they grow in sophistication, GCC asset managers are also increasingly looking to take their homegrown expertise beyond their borders and expand into new markets across Africa and Asia, where they aim to tap into emerging nodes of high-net-worth individuals.
