16,700 millionaires to transfer $571bln in Middle East

Around 16,700 millionaires will pass on their wealth to the next generation in the Middle East, which is estimated to be $572 billion (Dh2.1 trillion) over the next 10 years.

According to the recent Wealth-X Family Wealth Transfer Report 2019, 14,390 millionaires with an asset range of $5 million to $30 million will transfer $152 billion to the next generation while 1,460 millionaires controlling $30 million to $100 million will transfer $77 billion. The highest wealth transfer will materialise from 850 ultra-high net worth individuals (UHNWIs) with over $100 million wealth in the Middle East, which is estimated to be $352 billion.

This amounts to a 26.6 per cent wealth transfer by millionaires controlling $5 million to $30 million of wealth, 13.6 per cent by UHNWIs with $30 million to $100 million and 59.8 per cent by those with over $100 million.

"In the Middle East, for example, where patriarchy is the norm, many such individuals find it hard to cede control. It's only in the past two generations that they have accumulated this wealth, so they are used to having that control," said Tim Denton, vice-president and head of trust and wealth structuring at Emirates NBD bank.

"On one hand, you have to make clients aware [of wealth transfer's importance] but on the other you need to do this from a place of trust - it will only resonate with mutual trust and understanding," said Russell Hunter, head of the Middle East and UK at Schroder & Co Banque.

Family Business Council - Gulf (FBCG), a non-profit organisation, last year estimated that around $1 trillion (Dh3.67 trillion) worth of assets will be transferred to the next generation in the Middle East in the next 10 years.

Fadi Hammadeh, senior advisor to FBCG, said nearly 90 per cent of businesses are family-owned, which, collectively, contribute 50-60 per cent to national GDP. Family firms employ 70 per cent of labour force in the region, totaling more than 67 million employees.

Fourteen of the largest 500 global family businesses are located in the Middle East, employing 500,000 people, making up 3.2 per cent of GDP.

Worldwide, according to Wealth-X, the next decade will see $15.4 trillion of wealth to be transferred by almost 550,000 individuals with a net worth of $5 million or more to the next generation. North America will be home to over half of all the wealth transferred globally. A total of $8.8 trillion will be passed on in the region.