Times of Oman
 
Muscat, Jun 25: The rich in the Middle East lost more than 16 per cent of their total wealth in 2008 on account of volatile markets and a dramatic decline in real estate capital value, a study released by Merrill Lynch and Capgemini said yesterday.

The total value of wealth of High Net Worth Individuals (HNWI) — people with net assets more than $1 million, excluding their main home and consumables — dropped to $1.4 trillion, the 13th annual Merrill Lynch World Wealth Report showed.

The region had the second slowest decline rate after Latin America, which declined 6 per cent from the previous year.

The study also reported a 5.9 per cent fall in the population of high net worth individuals to 373,600. In the UAE and Saudi Arabia, their population fell, but at a rate lower than the global average of 14.9 per cent.

Population

The UAE had 12.7 per cent fewer HNWIs in 2008 than in the previous year, down to a total of about 67,000. In Saudi Arabia, there were over 91,000 HNWIs, down 10.9 per cent from the previous year.

The population of high net worth individuals in Bahrain, another Gulf Cooperation Council (GCC) state, was 5,000 in 2008, down 19.5 per cent from the earlier year.

The study attributes such huge declines in wealth in the Gulf region to a reduction in total market capitalisation as well as a dramatic decline in Gulf real estate capital values and rents. “We are seeing a shift in activity and priorities of the wealthy. There are currently opportunities for wealth management firms and advisers to understand and effectively address increased concerns by helping to navigate through uncertain economic times and build relationships that will continue into the future,” said Bertrand Lavayssière, managing director (Global Financial Services), Capgemini.

In comparison to the Gulf region, the world’s rich lost nearly 20 per cent of their total wealth as volatile markets wiped out two years of growth. The total value of HNWIs dropped to $32.8 trillion — below 2005 levels, the report said.

The number of ultra-HNWIs — people with fortunes of more than $30 million, excluding their main home and consumables — suffered more losses in wealth than the HNWI population as a whole. Consistent with the drop in the Ultra-HNWI population, the group’s wealth decreased 23.9 per cent, the study showed.

US, Japan, and Germany together accounted for 54 per cent of the world’s HNWI population in 2008, up slightly from 53.3 per cent in 2007. The US saw its HNWI population drop 18.5 per cent, the study said.

Overall HNWI wealth is expected to grow to $48.5 trillion by 2013, advancing by an annual rate of 8.1 per cent.