Middle East families are hopeful about economic recovery to 2019 level: Survey

By Rahul Vaimal, Associate Editor
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The majority of the business families in the Middle East hope that within the next 18 months the economy will revert to the 2019 level according to a recent survey conducted by Deloitte.

The global auditing firm Deloitte’s, Middle East Family Office Survey offers insights from more than 80 prominent family groups across the region on how they navigated the crisis, their focus areas and their concepts about the future.

Throughout the survey, a strong sense of optimism was visible among the participants despite the ongoing challenges and risks. About 75 percent of families hope that within 18 months revenue will get back to the 2019 level, while nearly 70 percent of the respondents said that income has declined by 10 percent or more over the past 12 months.

Growth through new products/markets remains one of the key priorities  along with cost rationalization and wider transformation exercises, says professional services firm Deloitte.

Resilience was also explored at a country level with responses suggesting that the strongest economies are deemed to be both the most affected and the most primed to recover.

“This year’s edition of the Middle East Family Office survey was particularly interesting and the results equally surprising as we would expect areas like optimism to rank low or not appear at all as a theme,” said Scott Whalan, Partner and Financial Advisory’s Family Office Leader, Deloitte Middle East.

When asked about family governance almost half of the respondents choose succession as the top priority, remarking it as one of their top three areas of focus, whereas 59 percent of the participants suggested that their legal family governance framework is currently not fit for purpose.

For regional families, sustainability comes at the top especially the ability to transition leadership. From the survey, it was learned that about 14 percent of respondents believed that their next-generation can lead immediately, whereas 64 percent of the families considering that their successors will only be ready to lead within the next five years.

Scott Whalan
Scott Whalan
Partner- Middle East Valuation

“The resilience across the entire family ecosystem has been tested by the recent pandemic. Whilst many families have successfully adapted and realigned priorities, further work remains across areas such as succession planning, private wealth structures, and optimizing business performance and investment portfolios.”

The Deloitte survey finds that some aspects of the family office required swift action. With the coronavirus outbreak technology and risk management sector became the most exposed areas.

When considering the investment strategies 67 percent of family offices plan to invest in the coming 12-18 months in both regional as well as international markets.