posted on 05/07/2012: 887 views
Dubai's status as a high-end destination is set to attract a growing number high net-worth individuals over the next five years, and local businesses are set to reap the financial benefits of their presence.
According to The Wealth Report, produced annually by Knight Frank in conjunction with Citi Private Bank, the distribution of the world's super-rich is shifting. The report, which was released earlier this year, says the UAE will see a 25 per cent increase in the number of centa-millionaires — those with at least $100 million in liquid assets — by 2016.
As a result, local companies across a range of sectors are drawing up strategies and releasing products to capitalise on the rising number of rich individuals living and working in the UAE. From airlines to credit card companies to hotels, everybody wants to be involved in this lucrative segment.
One company that is seeking to expand its presence in the UAE is Insignia Lifestyle Management, which caters for the "elite echelons of high society”. It has offices in major cities across the globe and is now working with local UAE lenders with a view to introducing a new range of ‘super' credit cards that are embellished with precious woods, bone, rocks, corals, pearls and faceted jewels. The company says it has developed strategic alliances with leading financial institutions worldwide and that it is currently negotiating collaboration with top banks in the UAE.
"These cards are bespoke and we have been working on them for a very long time. We are in a test phase and they are currently available to very few clients,” said Nada Tucakov, vice-president of Insignia Lifestyle Management.
"We will be targeting both Emiratis and expatriates but we would only deal with those who have more than £30 million (Dh177.9 million) in assets. The UAE is an important market for us but we expect clients there to fit a similar profile to those we already deal with,” she added.
The new cards can also be embellished with gold, platinum, diamonds and marble while holders enjoy unlimited spending power and 120 days interest free credit.
"When you look at high net-worth individuals, you see they want something unique and bespoke. They are an extension of their existing cards; an accessory that a high net-worth individual might possess,” Tucakov said.
"They spend quite a lot of money on beautiful jewellery so we want to offer them a card that can be part of their wallet/purse. It all depends on the individual profile but there will be a certain limitation for security reasons but we will make sure the client does not feel those limitations,” she added.
With 2,000 of the estimated 23,000 new centa-millionaires of the next five years predicted by the report to be coming from the Middle East and Africa, Dubai is in an ideal location to take advantage as other cities in the region continue to be affected by political uncertainty.
Visa, one of the main sponsors of the Dubai Shopping Festival revealed earlier this year that total card spend in the UAE between January 5 and February 5 amounted to US$497 million (Dh1.82 billion), a year-on-year rise of 22 per cent compared to 2011's DSF. Russians, Saudis, British, Chinese and Americans were named as the top spending nationalities during the month-long event.
More than a million Russians jetted in for the event, spending a record US$122.6 million on their Visa cards — a 356 per cent increase on 2011. Airlines have been quick to react to specific spending trends with commercial carriers such as Emirates and Etihad expanding their reach into Russia and China in recent years.
In its latest report, released last week, Visa said account holders from the United States, Russia and the United Kingdom spent a total of US$1.2 billion on Visa debit and credit cards during 2011 — almost a third (29.7 per cent) of total tourism spend in the UAE.
The UAE's business aviation sector is also witnessing unprecedented demand.
"Lately, we have seen a considerable growth on demand for charter flights,” said Ali Al Naqbi, founding chairman of the Middle East Business Aviation Association. "Regional charter operators have confirmed receiving a significant number of RFQs (request for quotations),” he added.
Al Naqbi says the majority of business aviation customers in the Mena region are middle-management personnel who require the service for work purposes. However, he said high net worth individuals play a significant role in the growth of the market.
"Furthermore, regional business aviation operators have placed a number of sale orders for second hand as well as new business aviation aircrafts. Additionally there has been a noticeable increase on business aviation flight movements within the UAE's airports,” he said.
Hotels are also taking advantage of the increasing number of high net-worth individuals visiting and investing in the UAE. In a bid to make Chinese visitors more comfortable, Ibn Battuta Gate Hotel has introduced Mahjong, a table game originating in China.
International travel by Chinese people has remained buoyant in the face of a global tourism downturn, in part thanks to China's more rapid rebound from the economic slump,” said Tong Wu, sales manager at Ibn Battuta Gate Hotel. "The UAE appears to be enjoying a growing profile, and Dubai in particular has become better known since the opening of the Burj Khalifa,” she added.
Wu says Dubai Tourism and Commerce Marketing (DTCM) organises seminars at which representatives from UAE hotels and airlines can meet Chinese travel agents. "Among the new targets — cities such as Tianjin, near Beijing, and Shenyang in the north-west — these gatherings help tour operators strike more competitive deals with UAE hotels and airlines,” she said.
"There are huge opportunities for Chinese investment in the UAE, especially in the energy sector. What is required at this stage is to promote those opportunities through an enhanced collaboration between the UAE and Chinese business community,” she added. – Gulf News
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