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Tough times strike Saudi Arabia’s millionaires

Turmoil in the Middle East, an unimpressive international stock market debut and tumbling oil prices will hit the wealth of Saudi Arabia's richest in years to come, according to a new report from WealthInsight.

Over the next five years, more Saudis will become U.S. dollar-millionaires, but the rate of increase will slow to 12.4 percent, less than half the steep 25 percent rate seen between 2010 and 2015, said the research firm.

Hassan Ammar | Stringer | Getty Images

This means that by 2020, around 55,245 Saudis will be high-net-worth individuals, with over $1 million in net assets, excluding their primary residence. This is up from 49,150 in 2015, according to WealthInsight, when Saudi Arabia—one of the most populous countries in the Gulf—had a total population of around 29 million.

One-fifth of Saudi Arabian millionaires make their money from oil, said WealthInsight, but the 50 percent decline in the price of WTI crude oil over the last 12 months is only one factor behind the upcoming slowdown.

"There have been other worries among the Kingdom's wealthy," Oliver Williams, head of WealthInsight, said in Monday's report.

"The collapse of the oil price is only half of the picture. So far, 2015 has seen the Kingdom's stock market make its disappointing debut on the world stage, two wars have been commenced along its borders and there is a new prospect of economic rivalry with Iran."

Saudi Arabia's Tadawul stock exchange officially opened to foreign investors on June 15 amid a great degree of hype. However, tight regulations and high valuations meant that foreign buyers failed to materialize in substantial volumes, while domestic investors sold. The benchmark Tadawul All Share Index has fallen by roughly 5 percent since then.

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Saudi Arabia's economic growth slowed from a peak of 10 percent in 2011 to 3.5 percent last year. The country is designated "high income" by the World Bank, with gross domestic product (GDP) of $746.2 billion in 2014.

Saudi Arabia's richest citizens have fallen this year in Forbes' list of the world's billionaires, particular those that are heavily invested in oil.

Prince Alwaleed Bin Talah Al Saud, Saudi's richest citizen with a net worth of $27 billion according to Forbes, fell to 34th place in the rankings in 2015 from 30th last year. However, Forbes said his wealth has risen from $20.4 billion in March 2014 and $22.6 billion in March 2015. The royal is invested in companies across the Middle East, Europe and the U.S., with high-profile stakes in Twitter, Citigroup and the luxurious Savoy Hotel in London.

Saudi's next richest man, Sheikh Mohammed Al Amoudi, is worth $10.9 billion according to Forbes and saw his place in the rankings decline more sharply than Al Saud this year. With a portfolio of energy, construction and agricultural companies, Al Amoudi's place in the rich list fell to 116th in 2015 from 61st last year. His wealth has fallen from a peak of $15.3 billion in March 2014, according to Forbes.

Winners

Things look better for Saudi's female multimillionaires—those worth more than $30 million—at least on the financial front. Their numbers are growing fast, shooting up 33 percent between 2010 and 2015, trumping the 24 percent growth seen in male multimillionaires.

In addition, the supremacy of Riyadh as Saudi Arabia's financial hub could be under threat from Jeddah, the kingdom's founding capital and residence of Al Amoudi. WealthInsight noted that the number of wealthy living in Jeddah was set to increase by 7.7 percent by 2019.

Male Saudis living outside Jeddah might look to healthcare to make their millions. Williams said that investing in the sector would be "an interesting diversification away from oil."

"In the next five years there will be a 27 percent increase in millionaires making their wealth from this sector, which is already a thriving business in the Kingdom," he explained.