The Gulf region’s asset management market will continue to grow above the global average to nearly USD 500 billion in onshore assets by 2026, a jump from USD 400 billion at the 2022 end, a study from the wealth management experts at Strategy & Middle East, part of the PwC network, predicted.
The study believes that despite global market complexities, the GCC asset management industry is exhibiting robust growth potential, which will be driven by strong capital inflows, favourable oil prices, and substantial trade surpluses.
The report also observed the presence of several tailwinds that are shifting trends in the region’s asset management industry. Currently, over 70% of the Gulf region’s private wealth is located in offshore accounts.
“This projected growth underscores the potential of the GCC asset management industry amidst global economic challenges. Despite the region’s preference for offshore investing, increasing product sophistication and supportive regulatory initiatives are making onshore investment more appealing,” said Jorge Camarate, partner at Strategy & Middle East, and the leader of the firm’s financial services practice, while interacting with the Khaleej Times.
The International Monetary Fund estimated in 2022 that Gulf countries together held a trade surplus of approximately USD 350 billion. Wealthy individuals have also been attracted to the region, with the UAE previously projected to attract the most millionaires worldwide in 2022. Additionally, an increased appetite for IPOs saw the Middle East raise a record amount in proceeds, exceeding USD 20 billion in 2022.
Boston Consulting Group analysts estimated that the Middle-Eastern assets under management (AuM) grew by USD 100 billion from 2021 to 2022, to reach USD 1.3 trillion.
Henley & Partners recently projected that the UAE will lead the world in attracting private wealth to its economy by 2028 as the country is expected to welcome 4,000 millionaires in the coming days.
According to another estimate, assets under management in the UAE are expected to show an annual growth rate (CAGR 2023-2027) of 10.59%, resulting in a market volume of USD 358.10 billion by 2027.
Aurélien Vincent, partner at Strategy & Middle East, stated, “As GCC countries continue to diversify their economies and deepen their capital markets, regional investors and institutions are poised to benefit from an expanding array of investment avenues and opportunities.”
Dmitry Abramov, manager at Strategy & Middle East, told the media that the Gulf region’s asset management industry is presented with a unique opportunity for growth.
“With the right strategic actions, GCC asset managers can capitalise on the tailwinds to capture new market share, effectively overcoming region-specific challenges,” the official stated further, while suggesting the region’s asset managers explore acquisitions of mid-sized independent firms, or form partnerships such as sales management agreements and co-branded products.
“In response to changing market dynamics, individual investors are increasingly seeking professional advice, driving the GCC asset management industry towards more advanced products. This trend, towards meeting sophisticated investor needs, has been facilitated by crucial regulatory initiatives around the region,” the report concluded.