As of the conclusion of 2022, a recent report has unveiled that the total household wealth in the UAE reached an estimated $1.2 trillion.
According to the Global Wealth Report jointly released by Credit Suisse and UBS, the wealth per adult in the UAE stood at $152,556 by the end of 2022. The ratio of household debt to gross assets in 2022 was 7.8 percent in the UAE, showing minimal change since 2021.
Wealth growth rates per adult in the UAE remained comparable to those in 2021, whether using current or smoothed exchange rates, at 18.7 percent and 20.6 percent, respectively. However, in 2022, the measured growth differed based on exchange rates. The report indicated that while wealth per adult rose by 11.7 percent in the UAE in 2022 at current exchange rates, it increased by only 4.1 percent using smoothed rates.
The report highlighted that the UAE accommodates a disproportionate number of affluent expatriate entrepreneurs, some of whom relocated following the global financial crisis. This trend has been more pronounced over the past year due to global uncertainties triggered by the Russian attack on Ukraine. It is estimated that approximately 4,500 high-net-worth individuals will choose the UAE, particularly Dubai, as their home this year.
On a global scale, the report showcased that measured in current nominal US dollars, total net private wealth decreased by $11.3 trillion, a decline of 2.4 percent, reaching $454.4 trillion by the end of 2022. Wealth per adult also experienced a decline of $3,198, equating to a drop of 3.6 percent to achieve $84,718 per adult. A significant portion of this decline was attributed to the appreciation of the US dollar against numerous other currencies. While financial assets were the main contributors to wealth declines in 2022, non-financial assets, primarily real estate, remained resilient despite rapidly increasing interest rates.
The report indicated that the loss of global wealth was prominently concentrated in wealthier regions like North America and Europe, which collectively shed $10.9 trillion. The Asia Pacific region recorded losses of $2.1 trillion in the same year. Among the markets that experienced the most significant losses in terms of market value in 2022 were the United States, followed by Japan, China, Canada, and Australia.
On the other end of the spectrum, the most substantial increases in wealth were recorded for Russia, Mexico, India, and Brazil.
In the realm of wealth per adult, Switzerland maintained its position at the top of the list, followed by the USA, Hong Kong SAR, Australia, and Denmark. Despite considerable reductions in mean wealth compared to 2021, these regions still ranked highly.
When dissected in terms of demographics, Generation X and Millennials continued to fare relatively well in 2022 in the USA and Canada, but they were not exempt from the overall reduction in wealth. In terms of racial breakdowns, non-Hispanic Caucasians in the USA experienced a decrease in their wealth in 2022, while African-Americans were less affected by the downturn. In contrast, Hispanics achieved a growth of 9.5 percent in 2022 due to their higher holdings of housing assets compared to financial assets.
In conjunction with the decrease in aggregate wealth, overall wealth inequality also declined in 2022, with the wealth share of the global top 1 percent dropping to 44.5 percent. The number of worldwide millionaires decreased by 3.5 million in 2022, reaching 59.4 million. However, this figure does not account for the 4.4 million “inflation millionaires” who would no longer qualify if the millionaire threshold were adjusted for inflation in 2022.
On a more positive note, global median wealth, which is arguably a more meaningful indicator of the typical person’s financial situation, increased by 3 percent in 2022, contrasting with the 3.6 percent decline in wealth per adult. For the global population, median wealth has increased fivefold in this century, roughly twice the pace of wealth per adult, primarily due to rapid wealth growth in China.
Looking ahead, the report’s projections suggest that global wealth will surge by 38 percent over the next five years, reaching $629 trillion by 2027. Middle-income markets are expected to be the primary drivers of this global trend. The report anticipates that wealth per adult will reach $110,270 by 2027, and the number of millionaires will reach 86 million. Furthermore, the number of ultra-high-net-worth individuals (UHNWIs) is projected to rise to 372,000 individuals.
Iqbal Khan, the president of global wealth management at UBS, noted that the Global Wealth Report for this year offers valuable insights into the economy and society’s state, as well as the evolving concept and potential of prosperity. This comprehensive analysis of household wealth covers the estimated wealth holdings of around 5.4 billion adults globally, spanning the wealth spectrum. It provides insights into future trends, assisting in forming expectations, comprehending the dynamic nature of wealth creation, and better grasping the potential of wealth to widely benefit society.
Anthony Shorrocks, an economist and author of the report, attributed much of the wealth decline in 2022 to high inflation and the US dollar’s appreciation against various other currencies. He explained that if exchange rates were held constant at 2021 rates, the total wealth would have increased by 3.4 percent, and wealth per adult would have risen by 2.2 percent during 2022. However, he cautioned that this is still the slowest wealth increase at constant exchange rates since 2008. Factoring in the effects of inflation results in a real wealth loss of -2.6 percent in 2022. He further highlighted that financial assets were primarily responsible for wealth declines, while non-financial assets, especially real estate, remained resilient despite the rapid rise in interest rates. He added that the relative contributions of financial and non-financial assets may reverse in 2023 if house prices decline in response to higher interest rates.
Nannette Hechler-Fayd’herbe, the chief investment officer for the EMEA region and global head of economics & research at Credit Suisse, expressed that the evolution of wealth remained resilient during the COVID-19 era and experienced significant growth in 2021. However, factors like inflation, rising interest rates, and currency depreciation led to a reversal in 2022. Looking forward, she anticipates that global wealth will surge by 38 percent, reaching an impressive $629 trillion by the year 2027. This growth will be primarily driven by middle-income markets. Furthermore, she highlighted that wealth per adult is expected to witness a significant increase of 30 percent, reaching $110,270. Alongside this, the number of millionaires is projected to experience substantial growth, reaching a count of 86 million. Additionally, the number of ultra-high-net-worth individuals (UHNWIs) is set to rise to around 372,000 individuals.
This year’s Global Wealth Report offers valuable insights into the present state of the economy and society, as well as the changing definition and potential of prosperity, as noted by Iqbal Khan, the president of global wealth management at UBS. This comprehensive analysis of household wealth covers an estimated 5.4 billion adults worldwide, encompassing various wealth levels. It not only provides a glimpse into future trends but also aids in forming expectations and understanding the evolving nature of wealth generation. Moreover, it sheds light on the potential of wealth to contribute positively to society at large.
Anthony Shorrocks, an economist and the author of the report, attributed a significant portion of the wealth decline in 2022 to factors such as high inflation and the appreciation of the US dollar against several other currencies. He highlighted that if exchange rates were held steady at 2021 levels, the total wealth would have experienced a 3.4 percent increase, with wealth per adult rising by 2.2 percent in 2022. However, he cautioned that even with this adjustment, this still marked the slowest wealth growth at constant exchange rates since 2008. When considering the effects of inflation, the result was a real wealth decline of -2.6 percent in 2022. He also noted that financial assets played a significant role in wealth declines, while non-financial assets, predominantly real estate, demonstrated resilience despite the rapid rise in interest rates. He pointed out the possibility of a reversal in the relative contributions of financial and non-financial assets in 2023 if house prices respond to higher interest rates by declining.
Overall, the report’s findings showcase the complex interplay of various economic factors on global wealth. While challenges such as inflation and currency fluctuations can have a significant impact on wealth trends, projections indicate a more positive trajectory for wealth growth in the coming years.