We’ve all been reading lately about the rising number of High-Net-Worth Individuals moving to and investing in the region, but I’ve been considering how this notable influx is actually shaping the GCC’s luxury markets.
But firstly, it’s useful to look at some facts and data. In case you aren’t familiar with the term, a High-Net-Worth Individual (HNWI) is someone with liquid assets of at least US$ 1 million, and up to $ 5 million.
Findings from the latest Henley Global Citizens Report show that the UAE is one of the fastest-growing wealth markets globally.
During the first half of 2022, Dubai witnessed an 18% rise in the number of high-net-worth individuals living in the city, up to 67,900 – making it the Middle East’s highest concentration of HNWIs, followed by Tel Aviv, Abu Dhabi, Doha and Riyadh. At that continued growth rate, Dubai would be counted among the world’s 20 wealthiest cities by 2030.
Such a rapid influx of wealth means the region clearly offers attractive investment opportunities, coupled with a very favourable tax regime and globally competitive property prices.
The UAE and the wider GCC have carefully crafted a legal and regulatory framework that favours HNWIs, entrepreneurs and innovators – a strategy that is now paying off.
Historically speaking, HNWIs are, more often than not entrepreneurs or business owners. Attracting such people to the region means they may well arrive with business plans or investment schemes in mind.
So, with an influx of wealth, the GCC economies are bolstered. Greater demand for property – especially the uber luxury properties favoured by the wealthy – will encourage more construction, while property scarcity drives up the local housing prices, again, something which boosts the local economy.
While many HNWIs are already attracted to the region’s global reputation as a safe and secure place to live, they are clearly also attracted by its lifestyle reputation. Year-round good weather, renowned chefs, leading retail experiences and world-class gyms, spas and salons seemingly on every street corner.
With high expectations of a certain lifestyle, the region’s retail and dining scene is certainly enhanced by more wealth. I expect to see more Michelin-starred restaurants arriving in the region, more designer brands and couture houses coming to the Middle East, and generally speaking, more suppliers of luxury goods and services. Property investors need high levels of property management services, and those HNWIs looking for leisure activities expect to be able to rent yachts, supercars and helicopters swiftly and easily, to name a few.
Of course, those with great wealth need help to manage their often complex finances, especially from an international tax, investment and business management perspective.
So we will also see a growth in wealth management services, family offices and business management consultancies.
Those wealth management services have had to adapt to the rapid digitalisation brought on by the pandemic and the rising tide of interest in Environment, Social and Governance as an investment theme. Locally and regionally, as we know, there is huge impetus for sustainable development and environmentally friendly business projects. Dubai attracts the most foreign direct investment in the region, and I think the rising tide of HNWIs will only serve to keep increasing this figure.
Clearly, welcoming HNWIs to the region with a raft of benefits, from easy visas to trustworthy investment opportunities and luxury living, is already beginning to pay off.
With a rising number of multi-millionaires arriving on our shores, this can only mean that our region’s economies will receive a boost, local employment opportunities across a wide range of sectors from hospitality and leisure to real estate and wealth management will increase, and greater demand for more upmarket dining and shopping experiences will benefit us all.