More new billionaires inherited wealth last year compared to self-made ones: report

UAE to rollover

WEB DESK: In the past year, a significant portion of the wealth amassed by billionaires was inherited rather than earned through entrepreneurship, reveals a report by Swiss banking group UBS.

The study, titled the UBS Billionaire Ambitions Report 2023, discloses that 53 heirs inherited a total of $150.8 billion, surpassing the $140.7 billion accumulated by 84 new self-made billionaires over the same period.

Conducted between June 28 and September 17, the survey engaged 79 billionaires from Europe, the Middle East, Singapore, Hong Kong, and the US.

Benjamin Cavalli, the head of strategic clients at UBS Global Wealth Management, anticipates that over the next 20 to 30 years, more than 1,000 billionaire entrepreneurs will pass on an estimated $5.2 trillion to their children.

As family businesses dominate the Gulf Co-operation Council region, contributing 60 per cent of GDP and employing over 80 per cent of the labor force, the need for succession plans becomes crucial. In the UAE and Saudi Arabia, family businesses constitute about 90 per cent of private companies.

The younger generation in the Middle East’s ultra-wealthy families is reportedly prepared to assume more financial responsibility and take bigger risks than their predecessors, as stated in a recent report by Swiss private bank Julius Baer.

Globally, billionaire wealth experienced a partial recovery in the 2022-2023 period, with a 7 per cent increase in the number of billionaires to 2,544 and a 9 per cent growth in total wealth to $12 trillion.

The EMEA region outperformed, driven by a post-pandemic shopping surge that boosted profits and share prices of luxury goods and cosmetics companies, particularly in France.

The Middle East, notably the UAE, saw a significant rise in billionaire wealth, overtaking other regional countries.

Meanwhile, the Americans maintained the largest concentration of billionaire wealth, totaling about $5 trillion. However, wealth in India declined, and China experienced slower growth.

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The consumer and retail sectors globally witnessed the most substantial increase in billionaire wealth at 18.1 per cent, reaching $2.6 trillion in the past 12 months. Media and entertainment followed with a 10.4 per cent year-on-year increase.

Legacy views varied among generations, with 68 per cent of billionaires with inherited wealth aiming to continue and expand their parents’ achievements.

According to The National News, as heirs inherit businesses, investments, and foundations, there’s a shift towards focusing on contemporary economic opportunities and challenges, such as new technologies, clean energy transformation, and impact investing.

In the EMEA region, first-generation billionaires expressed concerns about geopolitical tensions and inflation, while heirs identified the disruption of existing business models by new technologies as their primary risk.

However, there was consensus on the potential of generative artificial intelligence, with 65 per cent viewing it as a significant commercial opportunity in the next 12 months.

In terms of investment strategies, half of all billionaires polled in the EMEA region plan to increase exposure to developed market bonds, closely followed by hedge funds.

Additionally, there’s a trend among billionaire heirs to pursue careers aligned with their ambitions, skills, and circumstances, with more than half choosing to step away from family businesses.

Moreover, there’s a rising trend of billionaire heirs becoming philanthropists, engaging in new sustainability-focused ventures, or building upon existing ones, according to UBS.

This shift indicates a broader commitment to societal and environmental impact among the billionaire class.

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