Dubai, UAE — High net-worth individuals (HNWIs) in the Middle East are increasingly looking for alternative investments, such as private equity and real estate, as they seek to diversify their portfolios, the 2023 EY Global Wealth Research Report said while analyzing key trends in the Middle East wealth management market.
Also, against the global average of 45 percent, nearly 59 percent of Middle East investors are more likely to move their assets to another provider within the next three years for better yields.
“This drive to move assets is not generation-specific, with 81 percent of millennial and 50 percent of Gen X investors intending to move their assets before 2026. The service providers most likely to benefit from the shift are fintech, AI trading platforms and full-service institutions,” the report said.
It also noted that the HNWIs, who are expected to grow by 10 percent to 225,000 in 2023, are increasingly adopting digital channels to manage their wealth, such as online trading and mobile banking. According to the report, 60 percent of HNWIs in the region now use online trading platforms, and 50 percent use mobile banking apps. This trend is being driven by the increasing availability of digital wealth management services and the growing demand for convenience and flexibility from HNWIs.
According to the report, private equity is the most popular alternative investment among HNWIs in the region, followed by real estate and hedge funds.
Investors in the Middle East are becoming increasingly sophisticated. The report found that investors in the region are becoming more knowledgeable about financial markets and are increasingly comfortable with complex investment products. They are also looking for more personalized and customized investment solutions.
The report found that investors in the region are looking for wealth managers who can understand their individual needs and goals and who can develop customized investment strategies to meet those needs.
Regulatory challenges
The Middle East is a relatively young wealth market, and regulators are still playing catch-up with the rapid pace of change. This has led to some uncertainty in the market, which could dampen investment activity. According to the report, the most pressing regulatory challenges facing the Middle East wealth management market include the lack of a unified regulatory framework, the lack of clarity on taxation rules, and the lack of cooperation between regulators.
Key recommendations
• Focus on providing customized wealth management solutions that meet the specific needs of HNWIs in the region.
• Embrace digital channels to deliver wealth management services.
• Work with regulators to develop a unified regulatory framework for the wealth management industry.
• Provide clarity on taxation rules for HNWIs.
• Foster cooperation between regulators to create a more stable and predictable investment environment.