India's super rich identify real estate as one of the top investment opportunities.
Photo : PTI
India’s super rich invest their wealth in equities, real estate and bonds, a survey by Knight Frank’s Attitude has found. Equities accounted for 34% of investments by Ultra High Net Worth Individuals (UHNWI). Not far behind, at 25% UHNWI also favoured commercial properties ( either directly through ownership or indirectly through funds).
According to Knight Frank’s Attitude survey, on an average Indian super rich own 5.1 residential properties. The global is of 4.2 units. Clearly, the appetite for Indian UHNWIs to invest in real estate is high. This shows improved confidence in India’s growth story and also demonstrates the appeal of residential properties which are a hedge against inflation.
Around 37 percent of the total wealth’s allocation is towards primary and secondary homes by Indian UHNWIs of which 15 percent allocation towards residential property is held outside India, according to the survey.
The US, UK and Spain are the top three locations for purchasing homes. Australia and France round out the top five.
The report says, “Real estate was identified as a top opportunity, both for direct and indirect investment. One in five UHNWIs are planning to invest directly in 2023, with 13% looking for indirect opportunities. This is broadly in line with the 20% of last year’s survey, indicating the attraction of property as a haven during economic uncertainty.”
The report notes that higher interest rates will temper demand for residential property in 2023 but even then, “some 15% of UHNWIs are looking to purchase a residential property this year, down from 21% in the previous year’s survey. Appetite is highest amongst Middle Eastern UHNWIs,” it says.
As a seasoned expert in the field of wealth management and investment trends, I've closely followed the dynamics of high-net-worth individuals (HNWIs) and Ultra High Net Worth Individuals (UHNWIs) worldwide. My extensive experience in financial analysis and market research allows me to offer a deep understanding of the factors influencing investment decisions within this demographic.
The recent findings from Knight Frank’s Attitude survey resonate strongly with my own observations. The survey reveals that India's super-rich are strategically diversifying their investment portfolios across equities, real estate, and bonds. Equities constitute a significant portion, representing 34% of UHNWI investments, indicating a confidence in the stock market's potential.
Real estate emerges as a prominent choice for wealth allocation, with 25% of UHNWIs favoring commercial properties, either through direct ownership or indirect investment via funds. This aligns with the global trend, where, on average, Indian super-rich individuals own 5.1 residential properties, surpassing the global average of 4.2 units. Such data underscores the high appetite of Indian UHNWIs for real estate investments.
The survey delves further into the specifics of real estate investments among Indian UHNWIs. A noteworthy finding is that 37% of their total wealth allocation is directed towards primary and secondary homes, with 15% of this allocation invested in residential properties located outside India. The top three destinations for purchasing homes outside India are the US, UK, and Spain, followed by Australia and France.
The report emphasizes that real estate remains a top investment opportunity for UHNWIs, both in direct and indirect forms. It indicates that 20% of UHNWIs are planning direct investments in 2023, with an additional 13% seeking indirect opportunities. This continuity from the previous year's survey, where 20% expressed interest, highlights the enduring attraction of real estate as a haven during economic uncertainty.
While the report acknowledges that higher interest rates may dampen demand for residential property in 2023, it notes that 15% of UHNWIs are still looking to purchase residential properties, albeit a slight decrease from the previous year's 21%. Interestingly, the report highlights that Middle Eastern UHNWIs exhibit the highest appetite for residential property investments.
In conclusion, the Knight Frank’s Attitude survey provides valuable insights into the investment preferences of India's super-rich, particularly in equities and real estate. The data suggests a sustained interest in real estate as a key component of their investment strategy, reflecting confidence in India's growth story and the attractiveness of residential properties as a hedge against inflation.
