Despite a worldwide decline in the wealth of the super-rich, Dubai has emerged as a sanctuary for Russian wealth. In 2022, the United Arab Emirates experienced the most significant growth in private wealth, with assets under management reaching a staggering half a trillion dollars.
This surge in wealth can be attributed to a considerable influx of Russian assets from Europe, following sanctions imposed on Vladimir Putin's regime in the aftermath of the Ukraine war. Additionally, the UAE attracted a substantial influx of capital from other regions in the Middle East, Asia Pacific, and Africa.
According to a recent report by Boston Consulting Group (BCG), financial wealth in the Emirates is projected to reach $800 million (£629 million) by 2027, with an annual growth rate of nearly 10%. The growth is notably attributed to Russia's contribution. Analysts highlight the UAE's favorable business launch and real estate investment regulations as key factors driving this growth.
The absence of income tax in the UAE has further fueled its flourishing economy, leading to a significant increase in property prices in Dubai, which have surged by 63% since the beginning of 2022. While global super-rich individuals faced challenges such as rising inflation, market volatility, and geopolitical uncertainties, the Middle East experienced a remarkable surge in wealth.
After experiencing nearly 15 years of consistent growth since the global financial crisis, private wealth witnessed a 4% decline in 2022, reaching $255 trillion. The hardest-hit region was North America, where financial wealth plummeted by over 8% to $116 trillion. Similarly, Western Europe encountered a 3% decrease. This downturn followed a robust year in 2021, during which financial wealth surged by over 10%, marking one of the most significant increases in over a decade. However, a rebound is anticipated in 2023, with private wealth projected to increase by approximately 5% and reach $267 trillion.
The report attributes this expected recovery to an improved macroeconomic outlook, gradual reopening in China after strict COVID-19 lockdowns, a resurgence in stock markets, and growth in the Asia-Pacific and Middle East regions.
Even amidst market volatility, high-net-worth individuals persisted in allocating their funds to various investments, including real assets such as property, art, jewelry, rare antiques, and fine wine. The global value of these tangible assets experienced a growth of 5.5% in the previous year, reaching $261 trillion. When combining both financial and real assets, the total global wealth surpassed $516 trillion, representing an overall increase of more than 1%.
The report further highlights that while Switzerland
remains a prominent destination for wealth management, Hong Kong is expected to
surpass it, as it has achieved the highest asset growth in the past five years.
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