According to a study, the asset management market in the GCC is expected to surpass global growth rates and reach nearly $500 billion in onshore assets by 2026, marking a significant increase from $400 billion at the end of 2022. Wealth management experts at Strategy& Middle East, a part of the PwC network, believe that the GCC asset management industry possesses robust growth potential, driven by favorable oil prices, substantial trade surpluses, and strong capital inflows, despite the complexities of the global market.
The report highlights several factors contributing to the industry’s growth, including a shift in trends and the region’s preference for offshore accounts, where currently more than 70% of the GCC’s private wealth is held. However, increasing product sophistication and supportive regulatory initiatives are making onshore investment more attractive, leading to projected growth in the GCC asset management industry.
Jorge Camarate, partner at Strategy& Middle East and leader of the firm’s financial services practice, stated, “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.”
The International Monetary Fund (IMF) estimated a trade surplus of approximately $350 billion for GCC countries in 2022, with the region also attracting wealthy individuals, including the UAE, which was projected to attract the highest number of millionaires globally in 2022. Additionally, the Middle East witnessed record-breaking proceeds of over $20 billion from increased appetite for initial public offerings (IPOs) in 2022.
The Middle East, home to numerous ultra-wealthy families, entrepreneurs, and royals, saw its assets under management (AuM) grow by $100 billion from 2021 to 2022, reaching $1.3 trillion with a 7.0% compound annual growth rate (CAGR), as estimated by Boston Consulting Group analysts. The UAE, in particular, is expected to lead in attracting private wealth to its economy over the next five years, with projections of welcoming 4,000 millionaires, according to Henley & Partners.
Aurélien Vincent, partner at Strategy& Middle East, emphasized that strong capital inflows, supported by favorable oil prices and notable growth in IPOs, have been crucial drivers for the asset management industry in the GCC. He 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, highlighted the unique growth opportunity for the GCC asset management industry and suggested strategic actions such as acquisitions of mid-sized independent firms or forming partnerships through sales management agreements and co-branded products. By employing the right strategies, GCC asset managers can overcome region-specific challenges, outperform competitors, and capture new market share in the years ahead.
To meet the evolving demands of individual investors, who increasingly seek professional advice, the GCC asset management industry is shifting towards offering more advanced products. This trend, driven by regulatory initiatives across the region, enables the industry to cater to the needs of sophisticated investors, as highlighted in the Strategy& report.