The Middle East is creating new billionaires at a faster rate than most of the rest of the global economy, according to a new report.
Wealth-X, a specialist wealth research and consultancy firm, said the number of billionaires in the region increased by almost 8 per cent last year to 166.
The amount of wealth held by the region’s billionaires also climbed by 9 per cent, to US$450 billion. The Middle East is now home to 6.7 per cent of the world’s billionaires, which is more than South and Central America.
Worldwide, the number of billionaires grew more slowly, by 6.4 per cent, according to Wealth-X’s Billionaire Census. There are now 2,473 billionaires in the world, Wealth-X said, and their combined value grew by 5.4 per cent to $7.7 trillion. This outstrips the GDP of all countries except the United States ($17.9tn) and China ($12tn).
The Middle East had the second-fastest growing population of billionaires, behind Asia Pacific. The number of billionaires in Asia grew by 15 per cent to 645, and their total holdings increased by almost 20 per cent to nearly $1.7tn.
Gautam Duggal, the head of wealth management at Standard Chartered Bank for the Middle East, Africa and Europe, said that he was not surprised that the number of billionaires in the region grew.
“This region, on the whole, if you look at it from a wealth point of view, is growing steadily. Oil prices have impacted and if oil prices had not gone the way they had, this percentage would have been higher,” he said.
Despite this, he said that money flowing in from other countries was contributing towards greater wealth.
Standard Chartered’s latest wealth management report to clients stated that growing portfolios had become increasingly difficult over the past 18 months, with all asset classes struggling to produce returns last year. It said that the US economy is near the end of its current growth cycle, equity markets are fully valued and there is greater volatility in the global economy post-Brexit.
Mr Duggal said that market changes meant that most of its customers, irrespective of their location, were cautious about investments.
“They have diversified portfolios, which is the right thing to do. None of us have a crystal ball but having a diversified portfolio overlaid on bonds would go a long way towards having good returns over the next 12 to 18 months.”
Daffer Luqman, the head of wealth management at Abu Dhabi Islamic Bank, said that political stability, the ease of doing business and the “dynamic and ever-expanding economies” in the Gulf were contributing factors to the rise in the region’s billionaires.
He said the investment behaviour of the region’s richest people was not too different from other parts of the world but added that “the commercial and trading history and culture of [the UAE] and wider region, as well as the diversity of the population, tends to cultivate and accelerate the entrepreneurial spirit.
“Real estate investment, like many regions in the world today, is a key asset class for investors due to the lower yields of other asset classes.”
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