Strategy&: Private wealth in GCC doubles to 2.2 trillion

23 February 2015 Consultancy.uk

Private wealth in the GCC has more than doubled from 1.1 trillion in 2009 to 2.2 trillion in 2013. Since the financial crisis the region has seen spectacular wealth growth, not only in terms of the very rich but also in the doubling of affluent families. Key drivers for the growth have been a rebounding of equity markets, the transfer of oil wealth and geo-political financial migration.

A recently released report from Strategy& looks at the growth of private wealth* in the GCC** area since the financial crisis. One side of the report aims to give a fact based assessment of the economic potential in the region. While the financial crisis hit the region hard, with considerable wealth evaporating in the period following the collapse and bailout of systemically important financial institution, growth in the GCC over recent years has been the most consistent of the emerging markets. Since 2009 private wealth in the region has doubled, growing at a compound annual growth rate (CAGR) of 17.5% year - up from $1.1 trillion to $2.2 trillion in 2013.

Private Wealth Growth by GCC Country

Particularly the United Arab Emirates (UAE) has had strong growth, with a 25% CAGR, followed by Oman at 21%. In terms of total wealth, Saudi Arabia and UAE control the majority of the regions private wealth, at 74%, up from 71% in 2009.

In terms of categories controlling wealth, most of the value is in the hands of the regions HNWIs, which own 41% of the wealth, followed by the UHNWIs, controlling 34% of the wealth. The affluent have seen the highest creation of wealth, with a CAGR of 21%, they have managed to more than double their wealth in absolute terms from $261 billion in 2009 to $560 billion in 2013; lower but by no means doing poorly are the HNWIs whose wealth grew by 76% and UHNWIs’ wealth growing by 94%.

GCC Wealth by Segment

On top of improving market conditions, another driver for the dramatic increase in the wealth of ‘affluents’ is the increase in the group’s sheer size. Between 2010 and 2013 the number of affluent individuals increased from 850,000 - 880,000 to 1.25 million - 1.35 million, a nearly 50% increase. Particularly the UAE have grown in the past four years, with the GCC growing its share of affluent households from 16% to 26% between 2009 and 2013.

Affluent Households in Saudi Arabia and the UAE

Driving dollars
There have according to Strategy& been a number of drivers for the increase of wealth in the region. One driver has been the strong rebound of global equity markets, which have grown by as much as 50% between 2009 and 2013, the authors account for around 40% of the wealth gain emanates from the markets’ changing fortunes. Another key driver noted by the consultancy is the high oil price, which helped the various emirates fund mega-projects which has in turn created a large number of jobs and transferred considerable oil wealth to segments of the population. The economic woe of the West has also provided impetus for capital to look for opportunities in the developing world, with the GCC a region a key contender, creating further opportunities for wealth creation. Beside financial changes, geopolitical conditions in surrounding regions has created a wave of financial migrants looking to take their money out of volatile regions, such as Tunisia, Egypt, Iraq, Libya and Syria. The UAE has done particularly well from the movement of wealthy individuals to the region, with many of them pulling most of their wealth out of the affected countries. 

* “Affluent” means any household with stable investable assets of more than $200,000 on an annual average basis. The high-net-worth bracket (HNWIs) begins at $1 million of investable assets, while the ultra-high-net-worth (UHNWIs) segment threshold is at $50 million. Non-investable assets are excluded.

** Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

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Project management industry adds £156 billion of value to UK economy

15 April 2019 Consultancy.uk

Project management has grown into one of UK’s largest areas of business over the past decade, amid the increasing ‘projectification’ of work. With the gross value added to the UK economy by project management estimated to be £156 billion, this trend is likely to continue in the coming era.

Despite the huge success of project management in recent years, until now there has been relatively little data available on the size of project activity. As a result, there has been a great deal of debate on things like the number of people involved in the sector, the number of projects, and how it contributes to economic output. Due to this need for clarity, APM, the UK’s professional body for project management (the largest organisation of its kind in Europe, with 28,000 individual members) commissioned economists from PwC to shed light on the industry's economic impact.

The research concluded that the profession makes a more significant contribution to the UK economy than the financial services sector. 2.13 million full-time equivalent workers (FTEs) were employed in the UK project management sector, generating £156.5 billion of annual gross value added (GVA). In comparison, the financial services sector contributes £115 billion, and the construction industry adds £113 billion.

Gross value added to UK economy

Commenting on the discovery, Debbie Dore, Chief Executive of APM said, “Project management runs as a ‘golden thread’ through businesses, helping to develop new services, driving strategic change and sector-wide reform.”

Who is a ‘project manager’?

To reach these estimates, PwC’s researchers used detailed models to map out the value of project management activity. They ultimately defined relevant ‘projects’ as “temporary, non-routine endeavours or rolling programmes of change designed to produce a distinct product, service or end result… [with] a defined beginning and end, a specific scope, a ring-fenced budget, [and] an identified and potentially dedicated team with a project manager in charge.”

Building on this, they then went on to define what the act of project management actually is. The job consists of applying “processes, methods, knowledge, skills and experience” so that clients can meet their objectives and bring about planned outputs or outcomes. The analysts added that this includes “initiating the project, planning, executing, controlling, quality assuring and closing the work of an identified and dedicated team according to a specified budget and timeframe.”

Importantly, it should be noted that the profession is not exclusive to only roles explicitly labelled as ‘project manager’, but to any role where specialist project management skills are used. This means that across sectors these roles can have very different titles, from the self-explanatory contract managers of procurement, or the campaign managers of advertising, to the likes of festival co-ordinators in the events sector, and many more. The roles in question also span all strategic levels of the profession, from strategic to tactical and operational positions.

Gross value added of project management profession

From a sector perspective, the financial and professional services, construction and healthcare industries make up almost two-thirds of the total project management GVA. At the same time, understandably, the UK Government has a huge project portfolio, which further drives the size of the GVA the sector contributes, thanks to megaprojects like HS2 and Crossrail.

Commenting on this to the report’s authors, Oliver Dowden, Minister for Implementation remarked, “Project delivery is at the heart of all Government activity, whether it’s building roads and rail, strengthening our armed forces, modernising IT or transforming the way government provides public services to citizens. Getting these projects right is essential if we are to ensure that we build a country that works for everyone.”

Throughout 2019, 26 major government projects were delivered, representing a fifth of the overall Government Major Projects Portfolio (GMPP) of 133 projects. According to the IPA annual report 2017-18, these represented a whole life cost of £423 billion. In addition to this were a plethora of smaller scale projects, and those in early development.

Elsewhere, with the increasing digitalisation of the economy impacting entities of all shapes and sizes, IT and digital transformations tended to dominate the projects of the UK scene alongside new product development projects, with a respective 55% and 46% of organisations in the research sample having undertaken these types of project in the past year. At the same time, this varied across sectors, and unsurprisingly, in the construction and local government sectors, fixed capital projects were the main project type undertaken.

Outlook

Looking to the future, 40% of business leaders expect project management will grow in the coming years due to the increased use of projects – or the ‘projectification’ of the UK. In a trend that has been witnessed elsewhere, organisations have to rapidly and continuously change in the digital age of business, driving the need for project management.

Outlook for project management services

An increased focus on value over cost – especially in the construction sector – and a forecast increase in the number of international projects are predicted to be key drivers of growth, according to the expert contributors. However, this will not happen in the absence of challenges; more than half of organisations expressed concern over the perceived impact of political uncertainty in the UK. Skills and capability shortages were also cited as a potential barrier by a third of organisations.

With regard to budgets, meanwhile, a third of those surveyed by PwC said they expect the size of project budgets will increase in the coming three years, while 40% anticipate a growth in project size. As the profession continues to mature, and as the recognition of the importance of good project management grows, it is expected that a greater proportion of project work will gain more distinct attribution to the profession itself, giving more recognition and appreciation to the role of the project manager.

Speaking on the findings of the study, Sandie Grimshaw, a Partner at PwC, concluded, “The project management profession is relatively new compared to some other professions, such as lawyers, teachers and doctors. However, as project management is a core competence vital to organisations in the UK, the profession is critical and will continue to grow in stature.”