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Sunday, June 20, 2021

Studies: Qatar’s super-rich thriving, but peers struggling to keep up

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Qatari women

Two new separate studies about wealth held by Qataris has shown that while there is an established financial elite within the community, there are also many locals who are suffering financially while trying to keep up with their peers.

According to the latest edition of Barclays Wealth Insights, nearly all (98 percent) of Qatar’s most wealthy made their money in less than 20 years – the fastest rate in the world.

Just over one-third (38 percent) achieved high net-worth status in less than 10 years, and almost two-thirds of these individuals (60 percent) took advantage of the global economic crisis to increase their wealth through international investments such as property and stocks.

Meanwhile, in a second report by American Express, 18 percent of Qataris surveyed said they planned to cut back on spending on luxury goods and experiences in 2015 due to “changing personal circumstance.”

This is the highest figure in the GCC, according to the figures in the American Express Middle East Spending Survey and comes as up to three quarters of Qataris struggle with debt.

Wealth strategy

It is not clear how many Qataris are considered to be in the high net-worth category. As of 2013, there were 300 “ultra-net high worth” people worth $30 million or more living here, including 12 billionaires.

And previously, Qatar was ranked as having the world’s highest percentage of millionaires, with nearly 50,000 households holding private wealth of at least $1 million, according to the Boston Consulting Group. But the nationalities of those wealthy people were not disclosed.

For the 18th edition of the Barclays report, titled “The Rise of the Global Citizen?,” 2,000 high net-worth individuals (HNWI) from 17 countries were surveyed.

Qatari man

All of these entrepreneurs, business leaders and investors held more than US$1.5 million in total net worth, while 200 of them had more than US$15 million.

The report found that shrewd and bold financial decisions have paid off for many Qatari investors, who saw their wealth soar after taking advantage of opportunities in the global markets during times of economic crisis.

Specifically, investment in real estate, particularly in London and New York, is believed to be one factor to successful wealth growth, as the cities’ high-end property markets have boomed in the last five years.

Investment in developed market equities, especially the European and Asian stock markets, is also thought to have contributed.

The report also found that successful business people in the GCC are increasingly demanding diversified investments and global portfolios to help spread the risk.

They are also looking to add new lines to their business as a way of involving younger family members. In a statement, Faranak Foroughi, founder and CEO of Tharwa Management Consultancy, which specializes in wealth planning for GCC residents, said:

“As the families grow, the need for generational planning and managing transitions in the business are difficult challenges to address.

Expanding into new business lines and adding new dimensions to the business helps to avoid tension and intra-family conflicts.”

Debt woes

Beyond this elite, many Qataris have been struggling financially. In the recent past, increasing wealth among some citizens has come at the same time as growing debt among others.

According to a 2011 Credit Suisse report for example, wealth went up six-fold in the past decade, but debt increased nine-fold.

Cognizant of this problem, there has been a push in recent years to urge Qataris to spend more responsibly.

The 2011 National Development Strategy (NSD) states that three out of four Qataris are in debt, with most owing an average of QR250,000. But the report adds that it hopes to halve the number of indebted citizens by 2016.

According to a 2012 study from the Supreme Council of Family Affairs, there are many reasons Qataris spend irrationally, including competitive behavior. Other factors include:

  • Lack of planning;
  • Over-reliance on credit cards, which make spending easier;
  • Frequent visits to malls;
  • Failure to distinguish between necessities and luxuries.

In the AmEx study, though almost a fifth of Qataris they planned to cut back on high-end goods, almost as many said they planned to spend more in this category.

The report also found that, in a departure from previous years, more Qataris are favoring luxury experiences over high-end goods, with 70 percent of Qataris quizzed by YouGov as part of the MENA survey saying this was how they preferred to spend their money.

Going out for a nice meal was the favored experience for nearly half (46 percent) of all Qatari respondents, followed by holidays then “personal wellness experiences” such as spas.

Mazin Khoury, CEO of American Express Middle East, said:

“For Qataris, the special experience of fine dining or the personal fulfillment gained from a holiday creates the enriching moments which are increasingly regarded as the most valuable when it comes to luxury spending.”

Of those who still like to spend money on tangible goods, cars and jewelry – especially expensive watches – remain the favorite items, and Qataris are the second-highest spenders in the region for both. They come just behind Saudi Arabia in money spent on cars, and after Kuwait for jewelry.

For the MENA region more generally, sporting activities was the top choice for a treat.

This new spending pattern contrasts with the 2012 report, which found people were more likely to spend their disposable income on obvious status symbols such as designer clothes, electronics and cars.

Thoughts?

11 COMMENTS

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Mohammed Albanai
Mohammed Albanai
6 years ago

Problem with qatari’s is most of us want to live like a prince/ princess while most of us wouldn’t be able to afford such a life style

marklugo
6 years ago

That’s everywhere my brother. The poor kid in New York City uses $300 sneakers. Think about it.

desertCard
desertCard
6 years ago

“The report found that shrewd and bold financial decisions have paid off for many Qatari investors, who saw their wealth soar after taking advantage of opportunities in the global markets during times of economic crisis.”

Never hurts when you have the monopoly on a given product or service either I’ll assume.

Michael Fryer
Michael Fryer
6 years ago

According to the survey:

“Luxury spending by Qataris is set to remain robust during 2015, with 19% planning to spend more on luxury goods and services next year. However, with 18% planning to spend less on luxury in 2015 than this year, this is higher than any other GCC country, with respondents putting the fall in spending down to changing personal circumstances.”

Two points strike me in that statement – there are still more Qataris planning to spend even more on luxury goods in 2015 than Qataris planning to spend less. And Qataris, compared to their GCC neighbors, are facing the most economic “hardship” (for want of a better word).

At least this might stop some of the typical moaning of expats that Qataris are all swimming in money, when the truth is a lot of them are struggling financially.

Jaded
Jaded
6 years ago
Reply to  Michael Fryer

hardship indeed

Deepak Babu
Deepak Babu
6 years ago
Reply to  Jaded

You can only take the horse to the pond. You can’t force it to drink .

Cerebus
Cerebus
6 years ago

Debt is an anchor foisted upon the common people by complacent governments and greedy financial institutions. This is the same around the world. The lower and middle classes strive to live the life of the wealthy and are encouraged to do so through lavish spending on items that they cannot afford. Frugality and sound financial management are lost as core values in the modern world, where people buy $700 phones every year that are tossed aside the moment the new one comes out from the cult of Mac while millions live in poverty and starvation or under the threat of war and violence. Idiots, immoral or amoral stars are propped up as idols and examples and virtues of kindness and caring are cast aside. The world is crumbling around us, top news stories about the size of a Kardashian’s posterior and callipygian attributes gather more attention that the slaughter of innocents and the starvation of children. It is all part of the same cycle of control and distraction…..depressed people spend more, as do scared and angry people….debt enables these behaviors, and only the few elite benefit.

marklugo
6 years ago
Reply to  Cerebus

perfect put! Thank you.

The Reporter
The Reporter
6 years ago

Something is not right with this article but I can’t quite work out what. Have they looked at debt alone, or have they also taken into account the revenue from investments that is being generated by that debt.

marklugo
6 years ago
Reply to  The Reporter

Probably all her degrees. lol The problem with journalists today is that the flow is so fast and demanding that it’s easier to just write a story versus RESEARCH and WRITE a STORY. Good point with your comment.

marklugo
6 years ago

20 year wealth could be easily considered “new money”. New money comes with very little experience in wealth planning. As a result, they could easily go broke in a matter of a few years while other companies such as mall operators, retailers and credit card companies such as AMEX rake in the gains (since they do know the “money game” very well). It’s a cut and paste system for companies like AMEX, if it works in TEXAS, it works in NY and it will work in QATAR, INDIA and BARCELONA… The cut & paste global economic system will only fail when human behavior changes. Today, it’s BRAND and STATUS and you can make anybody broke with simply by utilizing those two variables (like a casino), but only if they don’t understand the principles of money and the retention of wealth.

Companies like AMEX hedge both sides. For example, now AMEX is an advocate of “understanding money” in failed economies such as the USA. Ironic, but makes sense. Just like the casino business model: You must have million-dollar winners every so often.

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