Where Did India’s Ultra-Rich Invest In 2022 To Grow Wealth?

Knight Frank said despite 2022 being the year of permacrisis, an extended period of instability and insecurity, nine out of 10 Indian ultra-high-net-worth individuals (UHNWIs) witnessed an increase in their wealth last year.

Around 35% of Indian UHNWIs saw total wealth change by over 10%, according to the real estate consultancy firm’s The Wealth Report: Outlook 2023. Equities, real estate and bonds were the mainstream investment allocation for Indian super rich, it said.

Knight Frank said that 84% of the investable wealth of Indian UHNWIs was allocated between equities, real estate and bonds. Investments in commercial real estate, either directly or through funds and real estate investment trusts (REITs), accounted for 25% of portfolio of Indian UHNWIs, it added.

The prolonged economic and geopolitical crisis continued to weigh down most of the prominent economies, but India’s resilient economic performance allowed the country to beat global trends in the year of permacrisis, according to Knight Frank’s latest edition of the annual Attitudes Survey.

Knight Frank Chairman and Managing Director Shishir Baijal said wealth held by UHNWIs is expected to grow in 2023, as India emerges as a market of opportunity and it is likely to remain in growth mode despite an impending global slowdown.

“The optimism of ultra-wealthy on wealth generation here is far higher than their global counterparts and this shall serve as the bedrock of investment and consumption decision,” he added.

Following are the key highlights from Knight Frank’s report:

Wealth Allocation

• Indian UHNWIs investable wealth allocated predominantly in equities, real estate and bonds.

• Equities, at 34%, constituted the highest proposition of the investable wealth in 2022.

• A significant proportion of 25% was allotted to commercial properties (directly through ownership, or indirectly through funds).

• The rise of commercial asset as an investment category with high allocation is a sign of improved confidence among investors towards India’s growth story.

• Seeking stability in an uncertain environment, 16% of investable wealth of UHNWIs found allocation in bonds.

Home Ownership

• On an average, Indian super rich own 5.1 residential properties, compared with the global average of 4.2 units.

• Around 37% of the total wealth’s allocation is toward primary and secondary homes by Indian UHNWIs of which 15% allocation toward residential property is held outside India.

• UHNWIs in India have the greatest appetite, owning an average five homes each, demonstrating the unwavering appeal for residential properties.

• The United Kingdom was the first choice for property purchases by Indians outside the country.

• The second preference for the property purchase was the United Arab Emirates, followed by US, Canada and India.

Investment Avenues

• According to the Attitudes Survey, 4% of Indian UHNWIs wealth is expected to be pursued in assets, which are passion driven rather than monetary gains.

• Art, watches, and luxury handbags remain the most sought-after investment of passion in 2023, with 53% of UHNWIs likely to acquire these items.

• Classic cars, wine and furniture are the second most sought passion led investments for 2023.

Baijal said the Indian ultra-wealthy have also demonstrated a growing appetite for property compared to global averages and this bodes well for the real estate market.

Five Big Themes For 2023

• The rate of inflation will dictate when central bankers can end the current cycle of rising interest rates. The results will reverberate through borrowing costs and global asset prices.

• There will be opportunities to reset as we enter a new investment environment, despite recessions across many major economies.

• Real estate is the top cited opportunity among the respondents seeking diversification and a hedge against inflation.

• Geopolitical tensions were dominant in 2022 and will continue to weigh on sentiment through 2023. Many will be familiar, but there will undoubtedly be surprises.

• The big three will have an outsized impact: the reopening of the Chinese mainland, India’s rise and the agility of the US economy.

Liam Bailey, global head of research at Knight Frank, said the Indian respondents expect wealth of the ultra-wealthy to continue to increase in 2023. “While 47% expect wealth to increase by more than 10%, 53% expect wealth to rise by at least 10% over the previous year,” he added.