UAE assets: What are the world’s richest people investing in?

With geopolitical tensions, economic instability, and technological disruptions affecting markets worldwide, the path to financial growth is unclear, causing many to debate not just where to put their money – but if they should invest at all.

Despite this, the world’s wealthiest investors have placed traditional assets like stocks and real estate as cornerstones of their portfolios, but are also making unexpected moves, according to experts.

So, what are the world’s richest investing in, in 2024?

“This year, wealthy investors are increasingly drawn to assets that align with their personal values and long-term goals. These include sustainable and impact investments, which offer both financial returns and social or environmental benefits. Additionally, alternative assets like fine art and collectibles remain popular. Investment choices are highly individualised, reflecting personal preferences and strategies rather than broad trends. For example, some may focus on cutting-edge technologies or innovative start-ups, while others might invest in traditional assets like real estate or blue-chip stocks,” Stuart Porter, a Dubai-based wealth coach and chartered financial planner told Arabian Business.

And while traditional assets such as equities and real estate are still popular, a surprising newcomer is gaining ground, according to Raji Kaippallil, a Dubai-based finance expert – farmland.

“One of the surprising assets that wealthy people are investing into are farmlands. The increasing demand but the limited availability provides both income as rent and appreciation in its value over the long term,” she said.

This shift reflects a broader trend among high-net-worth individuals (HNWIs), who are increasingly seeking tangible, inflation-resistant assets in a cautious economic climate.

However, Kaippallil added that aside from traditional investments such as there, ultra-high-net-worth-individuals (UHNWIs) are also investing in start-ups through angel investing and venture capital.

“It’s important to understand that investing in assets is a long-term strategy, something the wealthy are well aware of. Shorter-term strategies such as investing into startups with an earlier exit also carry high risks,” she said.

Wealthy investors ‘cautious’ in 2024, say UAE experts

When asked how the economy has changed wealthy investors’ choices in 2024, Kaipallil explained investors “have been cautious in 2024 with lesser exposure to riskier assets particularly crypto.”

Echoing the sentiment, Porter said while some wealthy investors “maintain” an interest in cryptocurrencies and NFTs, it is a “minor part of their overall portfolios (1 per cent or less).”

“Experienced investors are cautious and typically allocate only a small percentage of their wealth to these high-risk, volatile assets. They recognise the potential for significant returns but also understand the high level of risk involved. Many prefer to balance their portfolios with more stable and traditional investments, such as equities, fixed income securities, and real estate, while keeping a small allocation for speculative ventures like crypto and NFTs,” he said.

Porter added that wealthy investors are also exploring trends that “align with technological advancements, and societal shifts.”

One such trend, he said, that remains strong is sustainable investing, focused on green technologies, and companies committed to their environmental, social, and governance (ESG) goals.

In addition, Porter also noted that there is a “growing interest” in artificial intelligence (AI), biotechnology and clean energy.

“These investments are seen as future-oriented and capable of delivering substantial long-term growth. Another emerging trend is the use of digital assets and blockchain technologies, reflecting a broader acceptance of innovative financial solutions,” he said, adding that wealthy investors invest in assets that “typically appreciate or provide returns that outpace inflation.”

These include inflation-protected securities, real estate and commodities, Porter said, adding stocks in companies with strong pricing power and the ability to pass on higher costs to consumers are also popular choices.

Passion investments, risky investments ‘appealing’ to wealthy

Kaippallil further explained that wealthy investors also “understand the importance of diversification, i.e do not put all your eggs in one basket. Hence, they do have exposure to both asset classes but based on their goals and time frame, the proportion may look different for each individual.”

She explained that investments in tangible items such as “art, luxury cars, wine, fine art and watches, have always been popular with the wealthy and it continues to do so.”

Adding to this, Porter explained these “passion investments” are often indulged by the wealthy, to add “unique and surprising” assets to their portfolios.

“These assets not only diversify their portfolios but also reflect personal interests and tastes, providing both financial and personal satisfaction. Such investments add a unique dimension to their overall wealth management strategy but require specialist knowledge,” he said.

In addition, Porter added that “risky investments” are also growing to be appealing to the wealthy. These include venture capital, private equity, and speculative commodities.

“Venture capital involves investing in early-stage startups with high growth potential but also high risk. Private equity offers opportunities to invest in privately held companies, which can yield substantial returns but require patience and substantial capital. Commodities such as precious metals and rare minerals are also attracting attention due to their potential as hedges against economic instability and inflation. These investments are typically part of a diversified portfolio that balances risk and reward,” he said.

Porter explained wealthy investors tend to focus on long-term gains instead of short-term profits as their investment horizon spans decades or generations, reflecting a goal to grow wealth for the future.

“This long-term perspective allows them to weather market volatility and invest in assets with sustainable growth potential and benefit from compounding. By focusing on long-term objectives, they can build a diversified portfolio that balances risk and reward, ensuring financial security and growth over an extended period, rather than reacting to short-term market fluctuations,” he concluded.