India is set to experience the most rapid growth in the number of ultra high net worth individuals (UHNWIs) globally in the coming years, according to Knight Frank. The city of Mumbai has emerged as Asia’s premier billionaire hub, surpassing Beijing earlier this year. Globally, Mumbai holds the third position in terms of billionaire count, trailing only behind New York and London. The ultra-wealthy population in India, defined as individuals with a net worth of at least $30 million, saw a growth of 6.1% to reach 13,263 in 2023 from the previous year. By 2028, this number is expected to soar by 50.1%, marking the fastest surge in UHNWIs worldwide.
Approximately 30% of India’s UHNWI investments are channeled into luxury real estate, including projects overseas, mentioned Alok Saigal, the president of wealth management firm Nuvama Private. There has been a shift away from investing in land due to its low liquidity, with more focus on residential real estate, especially since the onset of the pandemic. On average, an UHNW Indian owns more than two homes, and about 12% of India’s super rich have plans to purchase a new house in 2024, as per data from Knight Frank’s wealth report. Offshore investments have gained significant traction among Indians, with an increasing interest in moving assets abroad or seeking global exposure.
Indian ultra-rich individuals are also showing a penchant for acquiring expensive real estate overseas, choosing Dubai as one of their favorite destinations, highlighted Chethan Shenoy, executive director at Anand Rathi Wealth. With its blend of Indian entertainment and sophistication, Dubai has become a highly sought-after location. Around 20% of Dubai’s offshore real estate market is owned by Indian investors. These luxury residential properties often serve as vacation homes for the affluent or are put up for rental, with possibilities of resale. Offshore real estate investments have gained prominence among the Indians looking to diversify their assets globally.
Rising Interest in Start-up Investments
Investing in startups is gaining popularity among India’s wealthy, particularly with the younger generation. Many young Indians who studied abroad have returned to start their ventures or invest in startups, leveraging their expanded exposure and networks. A shift towards backing early-stage companies is seen as a means of diversifying investment portfolios, as mentioned by Nitin Chengappa, managing director at Standard Chartered Bank. The dynamic strategy of investing in startups positions India’s UHNWIs to capitalize on significant returns across high-growth sectors like fintech, healthcare, and technology.
Alternative Investment Opportunities
India’s affluent individuals are actively exploring alternative investment options, with a focus on luxury goods. About 17% of UHNWIs’ wealth in India is allocated towards luxury items such as jewelry, art, and watches, according to Knight Frank’s findings. These alternatives are valued for their intrinsic worth, personal enjoyment, and potential appreciation over time. Investments in jewelry and art also carry cultural significance and serve as status symbols for the wealthy. Equities remain a favored asset class, with a significant portion of the rich investors’ allocations being directed towards equity stocks and mutual funds due to their potential for high returns.
India’s ultra-rich are witnessing a surge in wealth and are diversifying their investment portfolios to include a wide range of options, from real estate to start-ups and luxury goods. With the growing trend of investing abroad and exploring alternative asset classes, India’s UHNWIs are poised to capitalize on emerging opportunities and secure significant returns in high-growth sectors. The investment landscape for India’s wealthy individuals is evolving rapidly, driven by changing preferences and a quest for global exposure.