UAE entrepreneurs 'most optimistic' globally and expect to get wealthier despite headwinds

About 98 per cent of entrepreneurs from the Emirates expect their businesses to thrive, HSBC study finds

About 95 per cent of UAE entrepreneurs project their personal wealth to increase in the next few years, HSBC said. Bloomberg

Entrepreneurs in the UAE are among the most optimistic globally about future growth and expect to get more wealthy, but must address the issue of succession planning, a new survey from HSBC has shown.

About 98 per cent of entrepreneurs from the Emirates say they expect their businesses to thrive, with 95 per cent projecting their personal wealth will increase in the next few years – the highest among surveyed countries, the bank said in its Global Entrepreneurial Wealth Report 2024 on Thursday.

The personal wealth metric was broken down with 54 per cent in the Emirates claiming their wealth will “get a lot better”, 41 per cent believing it will “get a little better” and no one saying it will get worse.

The study covered about 2,000 entrepreneurs in 10 nations – China, France, Hong Kong, India, Singapore, Switzerland, Taiwan, the UAE, the UK and the US. HSBC measured entrepreneur optimism through the performance of their investment portfolios, business opportunities, confidence in their own abilities, technological advancements and the diversification of their business.

UAE entrepreneurs are more driven by “personal passions and interests” compared with their global counterparts, prioritising financial freedom and reinvestment while also cherishing travel, comfort and luxurious lifestyles, Farzad Billimoria, head of global private banking for the UAE at HSBC Bank Middle East, said.

The UAE has rapidly become a hub for the wealthy thanks to its strong economic growth and the policy reforms it has rolled out to attract investors. It ranked as the leading destination for high-net-worth individuals globally in 2024, attracting more than 6,700 millionaires, according to investment migration consultancy Henley & Partners.

Last year’s Brics Wealth Report by Henley & Partners noted that Dubai hosts 15 billionaires, 212 centi-millionaires – those with a net worth of investable assets of $100 million or more – and 72,273 millionaires. Henley data forecasts that the UAE will attract 4,500 more millionaires by the end of 2024.

The UAE enjoyed a 18.1 per cent increase in ultra-high-net-worth individuals, ahead of Saudi Arabia’s 10.4 per cent, Knight Frank’s Wealth Report 2024 noted.

The UAE’s pro-business policies are a major factor, “fuelling a thriving entrepreneurial ecosystem domestically and attracting global entrepreneurs eager to launch or even relocate their headquarters here”, said Richard Van Der Meer, head of commercial banking for the UAE at HSBC Bank Middle East.

However, approximately half of the UAE’s wealthy business owners do not have a succession or wealth transfer plan in place, Mr Billimoria said.

Ahead of the UAE are Taiwan, which leads this metric with 65 per cent, followed by Hong Kong (64 per cent), France and China (59 per cent), Singapore (56 per cent) and Switzerland (54 per cent). While next-generation entrepreneurs seek to preserve their legacies, succession planning remains challenging with high expectations, resulting in a struggle to find a potential successor, the study said.

“For some, this is because it is a difficult subject to acknowledge. For others, succession planning is put on the back burner just because running a business consumes so much time. But it’s an oversight that many come to rue,” Ms Spring said.

Succession planning has become increasingly important, particularly for wealthy families. The world is set for what has been dubbed as the “great wealth transfer” over the coming decades, with estimates of as much as $100 trillion of assets set to be bequeathed to the next generation.

Globally, investments – in sectors such as stocks, bonds and real estate – comprise the bulk, or about 63 per cent, of where entrepreneurs place their personal wealth, followed by other businesses (38 per cent) and precious metals and stones (24 per cent), the HSBC survey showed.

When it comes to lifestyle, 51 per cent, allocate their wealth to real estate for personal use, followed by luxury goods that include fashion and jewellery (40 per cent), and luxury experiences such as travel (35 per cent), it added.