Ultra-Wealthy Indians To Double In Five Years: Knight Frank Report
India is set to double the count of its ultra-wealthy in five years even as its economic growth sputters.
The number of ultra-wealthy Indians is set to double in five years as the economy grows.
The count of individuals with a wealth of more than $30 million—including their primary home—is expected to grow at 73 percent over five years to 10,354 in the country, real estate consultancy Knight Frank said in a report.
That will come on the back of estimated 7 percent growth in the GDP by 2022, the report said. “Despite the current slowdown, global economic pundits see strong long-term economic growth.”
The Indian economy expanded by 4.7 percent in the third quarter of 2019-20, slower than the revised estimated for the second quarter, according to official data. The GDP is expected to grow 5 percent for the full fiscal, the worst pace in more than a decade, as investments have fallen, consumption has cooled and manufacturing sector is underperforming. The government has promised measures beyond those announced in the Union Budget to boost the economy.
Preference For Property
India’s ultra-wealthy are piling into residential properties despite the real estate sector in the country facing many problems. Nearly a quarter of such individuals, according to the report, plan to buy property this year.
While 26 percent of India’s ultra-wealthy are looking to invest in commercial property within India; a further 15 percent are allocating capital for purchase outside the country of residence in the coming year, with the U.K., U.S., Australia, Singapore and United Arab Emirates as their top five preferred destinations.
The report also studied preferences of the ultra-wealthy while choosing a new home and found that 64 percent cited availability and quality of local “wellness” facilities as an important criterion.
“Indian ultra-high net-worth individuals are making changes to their investment preferences, be it impacting their lifestyle or their future wealth… we see the new aspect of ‘wellness’ as a prominent criterion for investing in real estate assets,” Shishir Baijal, chairman and managing director of Knight Frank India, was quoted as saying in the report.
“To protect and grow their investments, office sector remains the preferred asset class for private capital investors in India, along with healthcare and education, in second and third place, as investors continue to pivot to alternative asset classes in the hunt for yield, return and diversification,” the report said.
The report also pointed out that by 2024, Asia will be the world’s second-largest wealth hub outperforming Europe, with a five-year growth forecast of 44 percent.
“It appeared at some point in time that India was skipping the ‘manufacturing generation’ of economic growth moving straight to services, we now see the country rising in favour as a manufacturing destination for global corporations,” Baijal said. “As a result of a well-rounded growth in the future, private wealth is expected to rise in proportion to the economic growth.”
In 2019, equities remained the most preferred asset class for ultra-wealthy Indians with 29 percent allocation followed by 21 percent allocation for bonds and 20 percent into property investments. Private equity as an investment class saw a rise in allocation from 4 percent in 2018 to 7 percent in 2019. Nearly 85 percent of Indian ultra-wealthy individuals are expected to increase or maintain their asset allocation in private equity investments, it said.
Respondents in India, the report said, ranked the global economic slowdown as their main concern, affecting their ability to create or preserve wealth in the year ahead, followed by trade wars, other political tensions and poor governance or corruption.