India’s super rich put 32% of their wealth in residential assets: Report

India’s super rich put 32% of their wealth in residential assets: Report

As much as 32% of India’s ultra-high-net-worth individuals’ wealth is allocated towards residential real estate asset class of which nearly 14% is invested outside India. About 12% of India’s UHNWIs plan to buy a new home in 2024, according to Knight Frank’s The Wealth Report 2024.

As many as 32% of India’s ultra-high-net-worth individuals’ wealth is allocated towards residential real estate asset class. (Picture for representational purposes only) (Pixabay)
As many as 32% of India’s ultra-high-net-worth individuals’ wealth is allocated towards residential real estate asset class. (Picture for representational purposes only) (Pixabay)

UHNWIs refers to individuals with a net worth of $30 mn and above.

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A similar percentage of wealthy individuals in India purchased a new home in 2023. Globally, 22% of the ultra-wealthy are expected to purchase a home in 2024. The report further highlighted that on an average an Indian UHNWI owns 2.57 homes while a sizable 28% have rented out their second homes during 2023.

Number of Indian UHNWIs expected to increase to 19,908 by 2028

According to Knight Frank’s flagship report, The Wealth Report 2024, number of Indian ultra-high-net-worth individuals (UHNWIs) is expected to increase to 19,908 by 2028 from 13,263 in 2023, leading to a 50.1% growth in UHNWIs, highest growth in number of UHNWIs for any country, in the next five years.

Also Read: Real estate trends: Why are rich Indians buying luxury properties before the close of the financial year?

According to Knight Frank’s The Wealth Report 2024, 90% of Indian UHNWIs are expecting to witness an increase in their wealth during the year 2024. Almost 63% are expecting to witness a significant increase of more than 10% in their wealth value.

The number of wealthy individuals globally is expected to surge by 28.1% to 8,02,891 by 2028. In 2023, the number of UHNWIs globally rose to 4.2%, 626,619 from 601,300 a year earlier. India saw an annual rise of 6.1% in UHNWI population in 2023 over the previous year, which was recorded at 13,263.

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This expanding cohort of wealthy individuals looks favourably on real estate. Almost a fifth of UHNWIs plan to invest in commercial real estate this year, while more than a fifth are planning to buy residential, said the report.

Women make up 11% of global UHNWIs

Recent survey findings from Altrata suggest women make up around 11% of global UHNWIs. While still not a large share, this represents rapid growth from just 8% less than a decade ago.

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The report also observed that younger affluent groups are more confident about the economic outlook compared with older groups. Only 52% of HNWI boomers anticipate growing their wealth in the next 12 months, in contrast to 75% of Gen Z-ers, with 43% expecting “significant growth”.

Male HNWIs express greater confidence than women. This is particularly pronounced among male millennials, with 75% expecting their wealth to grow, compared with 64% of women. However, for Gen Z, these expectations are entirely reversed, with a remarkable 81% of women in this group expecting growth. Half expect “significant growth”

Turkey leads rankings with a 9.7% YoY expansion in UHNWI members

In terms of annual performances by various countries, Turkey leads Knight Frank’s rankings with a 9.7% YoY expansion in UHNWI numbers, followed by the US 7.9%, India 6.1%, South Korea 5.6%, and Switzerland 5.2%. At a regional level, North America leads with the number of UHNWIs up 7.2% YoY, the Middle East comes in second place at 6.2% YoY growth and Africa takes third place, growing by 3.8% YoY. Latin America is the only region to see its population of wealthy individuals decline by 3.6% compared to last year.

Also Read: Is capital appreciation the key motivation for rich real estate investors to buy luxury properties?

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “In a transformative era of wealth creation, India stands as a testament to thriving prosperity and burgeoning opportunities in the global economic spectrum. A remarkable surge in its UHNWI population, catapulting by 50.1% within the next five years is an indication of this phenomenon. With 90% of Indian UHNWIs envisioning a surge in their fortunes in 2024, the landscape of affluence is vibrant and dynamic. ”

Liam Bailey, global head of research at Knight Frank, said, “With the mobility of wealth increasing all the time, a key question is whether future growth remains within these and other high-growth markets, or whether there is a leakage of talent to Europe, Australasia or North America. Outside Asia, strong growth is focused on the Middle East, Australasia and North America, with Europe lagging and Africa and Latin America likely to be the weakest regions.”

Art best performing luxury asset class; Watches preferred by Indian UHNWIs

According to the latest edition of the Knight Frank Luxury Investment Index (KFLII), which tracks the performance of 10 popular investments of passion, reveals that art was the best performing luxury asset class with prices rising 11% in 2023.

Despite a year of record-breaking sales in the luxury investment market, for only the second time however, the KFLII edged into marginal negative territory with prices down on average 1% across the index. Though witnessing a depreciation of 9% during 2023, Whisky commands its premium value by generating 280% returns in a 10-year period.

Watch was the most preferred investment by Indian UHNWIs, followed by Art and Classic Cars. Globally, super rich cited Art as the preferred luxury investment, followed by watches and classic cars, the report added.

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