After an exceptional 2005 for the Middle Eastern financial markets, it seems all eyes are now firmly...
After an exceptional 2005 for the Middle Eastern financial markets, it seems all eyes are now firmly focused on this growing and seemingly prosperous market. But are there opportunities for advisers with expatriate clients, or is it a growing market for local adviser firms?
Last month alone, Lloyds TSB International Private Banking announced strategic growth plans which would see its offering grow by 50% over the next three years following the opening of a new state-of-the-art base in Dubai. It also indicated it would launch a Shariah-compliant investment product in the Gulf Region targeted at high net worth entrepreneurial clients.
On top of this Anglo Irish Bank has also opened a further office in Dubai to help it target the Middle Eastern market. It said its new venture in the Middle East reflected the importance of the area to international financial services.
Even HSBC has revamped its website to provide a 24-hour resource and information centre for companies selling its products in the Middle East.
But perhaps the most interesting news to emerge last month, was Investec Trust's plan to set up an office in Oman by September this year, subject to regulatory approval. Investec Trust said it chose Oman because of its status with the World Trade Organisation and for its regulatory framework.
It plans to distribute trust products to countries in the United Arab Emirates including Dubai, Bahrain, Kuwait and Qatar. Target population groups for the company will be 50% local Arabs with the remainder a mix between non-resident Indians and Western expatriates.
This follows from Friends Provident International's recent announcement that the Middle East market accounted for 50% of its profits last year.
So what is driving this growth? The Middle East is both the origin and destination for religious, leisure, cultural, and business travellers. There are some significant economic centres in the region, including Dubai, which attracts travellers to its world class hotels and shopping facilities. The Middle East also has recovering economies, changing laws and a youthful population which all help add to this rather rosy outlook. The assumption oil prices will remain at long-term sustainable levels and a booming property market are also key factors driving this growth.
There are also clear signs of increasing wealth and prosperity, according to the Merrill Lynch World Wealth report 2005, which predicted a 9.1% annual increase of the Middle Eastern population until 2009. One of the key drivers for this, it cited, was their governments' determination to build a financial services culture that encouraged individuals to be less reliant on the state.
Dubai has also become a hub for insurance companies marketing in the Middle East, not only serving British expatriates but also a highly diverse international market. Its International Financial Centre (DIFC) was set up in 2003 with hopes of it becoming a major gateway for investment to the Middle East, and judging by its success in recent years, it seems this has been accomplished.
The result is that the Middle East represents an expanding local market and expat population, and is building itself up as a global wealth centre: like Jersey but with a lot more land and oil. This scenario is a big opportunity for international advisers and where the product providers go, advisers are sure to follow.
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