While other markets are busy finding ways to stem capital flight, there is a growing trend of Middle Eastern investors keeping their money at home and taking control of their assets.
Dubai, Abu Dhabi and Qatar are now being seen as safe havens for investors to park their wealth. This trend became particularly prominent in the Arab Spring, when sizeable capital inflows from areas most affected by unrest entered the GCC, and is continuing to do so.
These are some of the findings highlighted in the Middle East Wealth Study 2013 by Qatar Financial Centre and Campden Wealth, an independent provider of information for generational family business owners and family offices.
A common theme prior to the financial crisis was that investors would rely largely on wealth managers to decide on how to best handle their assets. These days, however, the wealthy are now being extra cautious and want to make sure their capital works in their best interests.
About six in 10 (60 per cent) of the respondents said they did not just want to know more about the fees imposed on them, they “scrutinised” their relationship with their private bank or wealth manager more frequently than they did a year ago. Investors also referred to themselves as “very active” in the management of their portfolio.
“Rather more worrying for private banks and wealth managers servicing the ultra-high net worth individuals in the Middle East was that 80 per cent of respondents felt bankers did not take responsibility for their bad decisions,” the report said.
More than half (55 per cent) of respondents said they invested locally rather than internationally. “This is a significant development and backs up studies showing capital from emerging markets is staying put and being deployed much more in these markets than in the past,” said the report.
“Financial centres like Qatar, Dubai and Abu Dhabi were increasingly being seen as safe havens to deposit money. This was probably brought into focus more than ever by the large sums of money that entered these jurisdictions during that Arab Spring,” the report added.
Seeking more returns with relatively low risk, wealth owners in the region preferred to have cash and property in their portfolios. However, other options such as hedge funds and private equity were becoming popular as well.