What do the Gulf’s super-rich think about investing in the region?

For a long time now, cities such as Dubai, Doha, Riyadh and Kuwait have been the favourite investment destinations of the wealthy and affluent in the Gulf region.

In fact, despite a challenging year for the region, with plunging oil prices and geopolitical instability, the GCC still remains an attractive hub of investment for high-net-worth individuals (HNWIs).

Nevertheless, according to a new study from Dubai-based Emirates Investment Bank, there is a clear element of caution lingering amongst investors.

The “GCC Wealth Insight Report 2016” is based on a survey of HNWIs from the United Arab Emirates, Qatar, Kuwait, Saudi Arabia, Oman and Bahrain.

Here are some of the highlights of the report:

• HNWIs say that they are optimistic about the Gulf region as a whole.
• Consistent with previous years, the majority of GCC HNWI investors prefer to invest in the region rather than in global markets despite concerns about regional stability.
• 36 per cent of HNWIs in the GCC perceive that the regional economy is deteriorating—a fourfold increase from the 9 per cent in 2015
• 43 per cent of HNWIs surveyed said that the global economic situation has affected their banking and investment decisions.

WHERE WILL THE RICH INVEST IN 2016?

• Allocations to gold and precious metals rose to 9 per cent of total investments compared to 5 per cent in 2015.
• Seven in ten HNWIs (69 per cent) said that they plan to increase their investment in their own business in the near future.
• Six in ten (62 per cent) intend to increase their investment in cash or deposits, which suggests that HNWIs expect to remain somewhat cautious in the years to come.
• HNWIs were the most negative towards stocks, with just 20 per cent of HNWIs saying that they plan on increasing their allocations to stocks and 33 per cent saying that they plan on decreasing their allocations.

KEEPING ASSETS CLOSER TO HOME

Interestingly, a significant majority of the rich investors (76 per cent) prefer to keep their assets closer to home, because they are confident that investments in the region are secure.

Commenting on the regional economic situation, Khaled Sifri, CEO of Emirates Investment Bank, said: “Confidence in markets such as the UAE and Qatar remains very strong and, when taking a longer-term view, HNWIs say they are optimistic about the Gulf region as a whole. Consistent with previous years, the majority of GCC HNWI investors prefer to invest in the region over global markets, despite any geopolitical concerns.”

Despite this sense of greater caution, a clear majority of HNWIs (86 per cent) say that they are focused on growing their wealth rather than adopting a position of consolidation.