GCC sovereign wealth funds reach record $4.1 trillion

Dubai sees 80% surge in millionaires over decade

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KUWAIT CITY, May 20: The Gulf region stands as the epicenter of the world’s largest pool of sovereign wealth fund capital, boasting assets held by the 19 sovereign wealth funds of the Gulf Cooperation Council (GCC) that soared to a historic peak of $4.1 trillion by the conclusion of 2023, reports Al-Qabas daily. Projections suggest this figure could escalate to a staggering $7.6 trillion by 2030, according to certain expectations.

A recent report from Al-Monitor underscores the concerted efforts of the global finance industry to bolster its presence in the Gulf region, drawn by the proximity to trillions of dollars in sovereign wealth. Concurrently, the Dubai International Financial Center anticipates 2024 to be its busiest year yet, actively enticing more companies to relocate segments of their operations to the region.

To augment their appeal as emerging centers of wealth, Gulf countries can leverage the depth of their local capital. Recent reports on the wealthiest cities in 2024 revealed a notable 80% surge in millionaires in Dubai from 2013 to 2023, solidifying its position atop the list while designating several other Gulf cities as “rising wealth magnets of the future.” However, the wealth profile in the Gulf region still lags behind leading global wealth centers. Credit Suisse estimates the total wealth of households in the United States at about $151 trillion, $104 trillion in Europe, and $84 trillion in China, significantly eclipsing per capita wealth in the Gulf countries, which remains lower than North America and Europe.

The real estate sector emerges as a pivotal repository of Gulf families’ wealth while attracting international capital, notably in Dubai and Abu Dhabi. Foreign ownership of real estate has been encouraged in many areas, known as freehold ownership, attracting significant interest, particularly following the Russo-Ukrainian War, which prompted a surge in demand. Dubai recorded 118,993 residential transactions in 2023, marking a substantial 29.6% increase from 2022. In a bid to elevate the region as a rising center for global wealth, the next strategic move for Gulf states involves opening their economies and major assets to foreign investors. Attention is focused on the much-anticipated IPO of Etihad Airways, which witnessed a 41% year-on-year increase in passenger numbers in the first quarter of 2024.

The IPO of Etihad Airways would garner global attention, offering international investors access to the profits of Gulf airlines and their dominance on the Asian-European route. The momentum of public offerings in the Gulf region extends beyond the UAE, with nearly 70% of the 138 initial public offerings of Gulf state companies between 2018 and 2023 occurring on the Saudi Tadawul. Booming stock market activities have attracted foreign inflows, with Saudi Arabia aiming to achieve 25% foreign ownership by 2020. While falling short of this goal, foreign ownership has steadily risen, reaching 11.6% by May 2024.

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