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The GCC-based High Net Worth Individuals (HNWIs) prefer to invest more of their wealth in their own business and the real estate rather than in gold, stocks and bonds, according to a survey “GCC Wealth Insight Report 2015”, published by Dubai-based Emirates Investment Bank.
33% of HNWIs surveyed preferred to allocate their wealth in their own business and 30% in the real estate, compared to 17% in cash/deposits, 6% in direct investment/private equity and stocks, 5% in gold/precious metals, and just 3% in bonds. GCC HNWIs are however 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.
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.
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%).
Regional 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.
A large majority of GCC HNWIs (84% this year and 90% last year) are persistently more focused on growing than preserving their wealth, the survey found.