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India is expected to become the country with the fastest growing number of ultra-high net worth individuals in the world in the next few years According to consulting firm Knight Frank.
Earlier this year, India’s financial hub, Mumbai overtakes Beijing as Asia’s leading billionaire hub. Globally, the city has the third highest number of billionaires, after New York and London.
India’s ultra-rich population — people with a net worth of at least $30 million — up 6.1% from the previous year to 13,263 in 2023. According to Knight Frank, this number is expected to soar 50.1% by 2028, making it the fastest growing country for ultra-high net worth individuals in the world.
So where are India’s growing super-rich investing their wealth?
High-end real estate
Alok Saigal, president of wealth management company Nuvama Private, said that about 30% of ultra-high net worth individuals in India have invested in luxury real estate, including overseas projects.
He added that more wealth has been allocated to residential real estate since the pandemic as land is less liquid and people are no longer investing in land.
Data from the Knight Frank Wealth Report shows that the average ultra-high-net-worth individual in India owns more than two homes, and about 12% of India’s super-rich plan to buy a new home in 2024.
Offshoring has become quite an important and relevant issue for Indians today. As a result, people want to move some of their assets abroad or seek global exposure.
Alok Sehgal
President of Nuwama Private Company
Chethan Shenoy, executive director of wealth management firm Anand Rathi Wealth, said India’s super-rich are also buying expensive real estate overseas, with Dubai being the most popular.
“Dubai has all the Indian entertainment, Indian food… but just sophistication. It’s a more sophisticated Mumbai, a more sophisticated Delhi,” he said. About 20% of Dubai’s overseas real estate The owners of the pie are Indian investors.
These luxury residential properties are often vacation homes for the wealthy, or are rented out or may be flipped, two experts said.
“Offshoring has become quite an important and relevant topic for Indians today. So, people want to move some of their assets abroad or seek global exposure. Real estate is once again the starting point,” Sehgal said.
The lure of startups
Wealth managers told CNBC that investing in startups is becoming increasingly popular, especially among the younger generation of wealthy Indians.
Saigal said that in the past 15 to 20 years, many young Indians have gone abroad to study, gain exposure and build networks, and then returned home to run their own businesses or invest in startups.
“Their friends have started their own startups. So investing with their friends and putting money into these startups has become a big thing for them,” he added.
Nitin Chengappa, managing director at Standard Chartered Bank, said investing in early-stage companies is also another way to diversify your investment portfolio.
Chengappa said India’s ultra-high net worth individuals generally view startup investing as a “dynamic strategy to create wealth”, positioning themselves to earn significant returns in high-growth sectors such as fintech, healthcare and technology.
Shoppers at DLF Promenade shopping mall in New Delhi, India on October 21, 2023.
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Anand Rathi Wealth’s Shenoy said consumer goods startups are gaining traction as these investors increasingly look at the pie in India’s consumer boom.
“They now want to invest in companies that are launching unique goods, and they want to be part of India’s next big story,” he said. As the number of middle- and high-income households increases, the Indian consumer market is expected to become the world’s third largest consumer market by 2027 , Based on Fitch Solutions BMI estimates.
According to forecasts, India is expected to have 180,000 new startups and 280 unicorns by 2030 Estimates from startup information provider Inc42. By the end of 2023, India has 117,254 new startups — index An increase from 350 in 2014.
Luxury
Standard Chartered’s Cheng Japa said India’s wealthy are also actively seeking alternative investment opportunities.
“Ultra-high net worth individuals generally have the resources to achieve a higher degree of diversification across a wider range of asset classes, geographies and investment strategies,” he said. This means their portfolios tend to be more exposed to things like luxury goods. Alternative Investments.
Women are talking on the phone outside the LVMH Moet Hennessy Louis Vuitton SA store in DLF Emporio shopping mall in New Delhi, India.
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Knight Frank’s survey results show that about 17% of the wealth of India’s ultra-high-net-worth individuals is invested in luxury goods, with jewelry, art and watches being their top preferences.
These alternatives often have intrinsic value and can be enjoyed personally while appreciating over time, Chengappa said, adding that investments such as jewelry and art also have cultural significance and can be considered status symbols.
Stocks remain in favor
Experts say equities remain a favored asset class among India’s wealthy due to their high return potential.
“The primary investment asset class for the ultra-rich continues to be stocks and equity mutual funds,” said K. Joseph Thomas, director of research at Emkay Wealth Management.
He said that the overall upward trend in the Indian market is closely related to the country’s GDP growth and liquidity inflows (especially small and mid-cap stocks).
Standard Chartered’s Cheng Apa said wealthy investors have large allocations to blue-chip stocks, high-growth mid-cap stocks and industry-specific investments such as pharmaceuticals and technology.
