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UAE’s financial advisory market likely to hit Dh875 billion

Surge in influx of the ultra-rich boosts assets under management in the UAE

The financial advisory market volume of the UAE is projected to exceed Dh875 billion in 2023 on the back of a major upswing in the influx of ultra-high-net-worth individuals (UHNWI) to the country.

Home to over 200 nationalities, the UAE has typically seen migration inflows of 1,000 high-net-worth individuals (HNWIs) per year, says Bas Kooijman, CEO and asset manager of DHF Capital, a securitisation firm for financial services. In 2022, the UAE, one of the most preferred destinations in the world for the wealthy, welcomed over 5,200 people from this bracket, recording a jump of 18 per cent.

“This strong growth is set to sustain in 2023 with industry analysts expecting that 4,500 millionaires will move to and permanently reside in the Emirates. For over 50 years, the UAE has laid the groundwork for such an evolution but Covid-19 appears to have accelerated this progress,” said Kooijman.

He said the deft handling of the pandemic demonstrated the country’s ability to foster safety and security while also protecting residents’ best interests and the nation’s economy. “These efforts garnered global attention to attract affluent investors from all over the world. In turn, a strong influx of wealth has entered the country over recent years.”

According to the latest list compiled by residence and citizenship planning firm Henley and Partners using resident millionaires as its metric to rank the wealth of each hub, Dubai rounds out the top 20 with 64,800 millionaires calling the city home, while New York City retained its crown as the world’s wealthiest city.

Data shows that assets under management (AUM) in the UAE’s wealth management market are forecasted to reach upwards of Dh938 billion in 2023 while showing a CAGR of 10 per cent to result in a market volume of nearly Dh1.4 trillion between now and 2027, said Kooijman.

The UAE’s financial wealth will witness a strong expansion in coming years, growing from $700 billion in 2021 to $1 trillion in 2026, according to a Boston Consulting Group study.

Data provided by Statista shows that assets under management in the UAE wealth management market are projected to reach $239.40 billion this year with financial advisory dominating the market with a projected market volume of $223.50 billion in 2023. Assets under management are expected to show an annual growth rate (CAGR 2023-2027) of 10.59 per cent, resulting in a market volume of $358.10 billion by 2027.

According to the GlobalData Country Risk Index, the UAE is a low-risk nation that ranks 10th out of 153 countries worldwide. Meticulous management of the pandemic, alongside proven stability through times of turbulence such as the financial crisis in the early 2000s, has been among factors behind this status.

Investment experts and asset managers see the UAE as an ideal mid-point between the West and the East, with both European and Asian private banks and wealth managers establishing or expanding their operations. They believe more global wealth will pour into the UAE from all over the world as the Arab world’s second largest economy continues to develop and evolve its economy, regulations and broader wealth management offering.

The growth of the economies in the region, of private wealth locally, and the continuing rapid inflow of HNW and UHNW families and wealth from across the globe provide the tailwinds for the expansion of the market, with sufficient headroom even today for the rising number and diversity of competitors in the wealth management space, experts said.