A report seeks to shed light on what HNW investors in the Gulf state invest in.

Cash and bonds are the biggest asset allocation choices for high net worth individuals in the United Arab Emirates, new figures show.

The UAE is the second-largest market for high net worth individuals behind Turkey. It ranks ahead of Israel and Saudi Arabia, according to a report by New World Wealth. (For the purposes of this report, local HNW individuals include all individuals who are working in the country, including expats.)

At the end of 2014, there were about 72,100 HNW individuals (with net assets of $1 million or more) living in the UAE, with a combined wealth of $305 billion.

One in every 130 people living in the UAE is a HNW individual; UAE high net worth individual volumes expanded by 59 per cent over the review period (2007-2014).

This strong growth was supported by the migration of over 10,000 HNW individuals into the UAE during the period and well performing local equity and local real estate markets.

Among other findings, the report said the recent slide in crude oil prices has hit the wealth of HNW individuals. (During the period of the survey, oil fell by 27 per cent.)

Over the three year forecast period, the number of UAE high net worth persons is forecast to grow by 15 per cent, to reach approximately 82,600 by 2017. The falling oil price will be a headwind for growth, the report said.

Asset allocation
At the end of 2014, cash and bonds was the largest asset class for wealthy individuals in the UAE (32 per cent of total assets), followed by business interests (23 per cent), real estate (22 per cent), equities (17 per cent) and alternatives (6 per cent).

Real estate recorded the strongest growth over the review period, followed by business interests.

Over the forecast period, real estate and equities are expected to be the top-performing asset classes. As a result, there will be a movement away from cash towards these asset classes.
Liquid assets amounted to $111 billion in 2014, representing 36 per cent of the wealth holdings of local HNW individuals.

Where the money is
The share of wealth held outside the jurisdiction has shrunk somewhat: At the end of 2014, UAE individuals held 41 per cent of their wealth abroad compared to 47 per cent in 2007.

At the end of 2014, Europe made up the largest share of foreign holdings at 57 per cent. This was followed by Asia Pacific (16 per cent), the rest of the Middle East (15 per cent) and North America (7 per cent).