According to Capgemini’s World
Wealth Report 2018, a total of 656,350
high-net-worth individuals (HNWIs)
in the Middle East were collectively
holding US$2.5 trillion. The number
of HNWIs rose by 2.1% from 2017.
A recent study by Deutsche Bank
estimates that private wealth in the
region will increase by 6% annually,
outperforming the US at 4% and Europe
at a more modest growth of around 3%.

As the main growth in the Middle
East is coming from GCC countries,
this will mean that the Islamic wealth
management industry will grow at
a similar pace, as the Islamic wealth
management industry plays an
important role in these countries.
This has not remained a secret and
competition is increasing in the Middle
East in the area of wealth management.
International banks are increasing their
presence in the region in order to att ract
more HNWIs. An increasing number of
single and multifamily offi ces have been
set up in the Middle East while fi nancial
jurisdictions in the region such as the
Dubai International Financial Centre
and the Abu Dhabi Global Market are
introducing new legal regimes geared
toward the wealth management industry,
such as their respective foundation law
and trust laws.

A main diff erentiating factor with all
competitors will be the ability to off er
products that are tailored to the needs of
clients and that also means off ering the
right Shariah compliant products. The
main diff erence between conventional
and Islamic wealth management is,
of course, the fact that Islamic wealth
management must be in compliance with
the rules of the Shariah.
While conventional wealth managers
do not have to consider whether their

products are ethical or in compliance
with any religious rules, Islamic wealth
managers have a more complicated task.
Islamic banking has been steadily
advancing in most GCC countries. In
the UAE for example, Islamic banking
has been growing at 7% in 2018, while
conventional players were only growing
at 4%. That has led Islamic players to
being able to gain market share in these
countries. In Malaysia, the market share
rose to 25% last year, while in Kuwait it
rose to 40% and in Saudi Arabia to even
50%.
Despite this success, Islamic banks
remain focused on competing with
conventional banks, mainly in the
retail space. In the wealth management
fi eld, Islamic banks oft en lack the scale
and resources to off er a wider product
range. The off erings still lack two
main components. Firstly, they remain
mainly focused on their respective
home country, with very limited off ers
on cross-border products. Due to the
economic conditions in the region,
HNWIs are, however, looking to invest
internationally in order to diversify
and spread their risks across various
countries.

Secondly, the universe of Shariah
compliant products in the wealth
management space remains very
limited. Traditionally, Islamic wealth
managers are able to off er their clients
products such as Sukuk and Islamic
funds or property fi nance in their home
jurisdiction. Although the product range
has slightly increased, their portfolio is
quite limited when compared to their
conventional competitors.
Clients are looking at diversifying their
portfolio, invest outside of their home
jurisdiction and receive guidance on
estate planning matt ers. Islamic wealth
managers should be able to assist their
clients who are seeking property
investments in Europe or Asia. They
should be able to off er them private
equity transactions, as well as
investments in social impact projects,
green or sustainable projects. They
should also be capable of advising on the
right estate planning tools and assist in
structuring family wealth. If Islamic
wealth managers are able to compete on
a global level and with more interesting
products, only then can they lead and
take advantage of the estimated growth
in the coming years.