Wealth in Turkey: Sizing the Market Opportunity; Sizing the wealth market in Turkey and its growth potential.

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While growth in Turkey’s economy has slowed thanks to a number of economic and geopolitical challenges, the country’s small affluent population will continue to increase at a healthy rate. The retail savings and investments market is dominated by deposits, though stronger growth is predicted for the smaller asset classes such as equities and mutual funds. The offshore market remains important, accounting for around 25% of HNW portfolios, with tax efficiency and client anonymity the primary drivers for holding assets overseas.

Scope

• In 2015, 2.3% of Turkey’s population was affluent, with the number of affluent individuals forecast to increase by 11% a year between 2015 and 2019.

• The mass affluent currently hold the bulk of the country’s wealth (61.3% of liquid assets). Total affluent assets are expected to continue to grow in line with the number of affluent individuals over the next five years, rising by 10% a year to reach $435bn by 2019.

• Strong growth will continue in the country’s relatively undeveloped savings and investments market. Deposits still dominate (88.2% of assets in 2015) due to structural factors, the taxation regime, and consumer preferences.

• Relatively strong growth is predicted for smaller asset classes (7% a year for equities and 8% a year for mutual funds to 2019) as Turkey’s capital markets begin to mature, but these classes will remain only a small proportion of the overall portfolio.

• Property remains a vital component of wealth portfolios. Turkish HNW individuals hold 17% of their investible assets outside traditional investments, with just under half of these assets held in direct property investments. Turkey has the highest share of alternative investments allocated to direct property among the countries included in Verdict Financial’s Global Wealth Managers Survey.

• Offshore investments account for around 25% of HNW portfolios, with assets mainly in the US and Germany.

Reasons to Buy

Benchmark your share of the Turkish wealth market against the current market size

Forecast your future growth prospects using our projections for the market to 2019

Identify your most promising client segment by analyzing the penetration of affluent individuals in Turkey– both at country and regional level

Evaluate your HNW proposition by understanding how the Turkish tax systems will impact HNW clients

Review your offshore strategy by uncovering the HNW motivations for offshore investments and their preferred booking centers.

Table of Contents

Executive Summary

Key findings

Critical success factors

Sizing and Forecasting the Wealth Market in Turkey

Strong growth is forecast for Turkey’s concentrated wealth market

The number of affluent individuals will grow by 11% a year between 2015 and 2019

Turkish affluent individuals held $294bn in liquid assets in 2015, around 97% of the total

Drivers of Growth in the Turkish Wealth Market

Strong growth will continue in the relatively undeveloped savings and investments market

Growth will slow after 2015 but will remain strong

The Turkish market is overwhelmingly focused on deposits

Deposits will continue to drive growth but relatively strong increases in equities and mutual funds are expected

Deposit growth is expected to remain strong, driven by GDP

Retail bond growth has been poor in recent years

There are moves to develop the Islamic finance sector, but it remains limited

Mutual funds and equities will grow as Turkey’s capital markets sector develops

HNW Investment Preferences

Turkish HNW individuals allocate 17% of their portfolios into property and alternative assets

Direct property ownership accounts for the bulk of non-liquid investments

Turkish HNW individuals hold almost 25% of their wealth offshore

Client anonymity and tax efficiency are the main drivers for offshore investment

The majority of Turkish HNW offshore wealth is booked through the US and Germany

Appendix

Abbreviations and acronyms

Supplementary data

Definitions

Affluent

Domicile

DTA

FATCA

HNW

Liquid assets

Mass affluent

Onshore

Residency

TIEAs

Methodology

Verdict Financial's 2015 Global Wealth Managers Survey

Global Wealth Model methodology

Global Retail Investments Analytics methodology

Bibliography

Further reading

About Verdict Financial

Disclaimer

Table

Table 1: Turkey: adult population segmented by asset band (000s), 2009–15

Table 2: Turkey: adult population segmented by asset band (000s), 2016f–19f

Table 3: Turkey: onshore liquid assets by asset band ($bn), 2009–15

Table 4: Turkey: onshore liquid assets by asset band ($bn), 2016f–19f

Table 5: Turkish lira-US dollar exchange rate, December 31, 2015

Figures

Figure 1: Just over 2% of the population in Turkey is affluent

Figure 2: The Turkish mass affluent hold the bulk of the country's wealth

Figure 3: In spite of a slowdown, strong growth will continue in the Turkish retail savings and investments market

Figure 4: Deposits dominate the Turkish market and will drive liquid wealth to reach $413.5bn in 2019

Figure 5: While deposits will drive growth to 2019, faster growth is also expected in the smaller asset classes of equities and mutual funds

Figure 6: Deposits will continue to grow strongly

Figure 7: Bonds are forecast to decline as an asset class

Figure 8: Equities and mutual fund holdings are correlated with the performance of the stock market

Figure 9: Direct property investments account for the bulk of illiquid assets

Figure 10: Turkish HNW individuals hold 25% of their liquid wealth offshore

Figure 11: Client anonymity and tax efficiency are the key drivers of offshore investment

Figure 12: The US and Germany accounted for 82% of Turkish HNW offshore assets in 2015

Figure 13: Turkey has signed a limited number of TIEAs

Frequently asked questions

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