India is projected to experience the most rapid expansion in ultra high net worth individuals worldwide over the coming years, according to consultancy Knight Frank. This comes as no surprise given the surge in India’s ultra-wealthy population, with a net worth exceeding $30 million, which increased by 6.1% to 13,263 individuals in 2023. The ultra-wealthy in India seem to be shifting their investment focus towards luxury real estate both domestically and internationally.
According to Alok Saigal, president of wealth management firm Nuvama Private, about 30% of India’s ultra-wealthy investments are directed towards luxury real estate, including overseas projects. The trend seems to be moving away from investing in land due to its low liquidity, and there has been a significant increase in wealth allocated to residential real estate post the pandemic. On average, an ultra high net worth Indian owns more than two homes, and approximately 12% of India’s super rich intend to purchase a new house in 2024, based on data from Knight Frank’s wealth report. Offshore real estate investments have also gained traction among Indians seeking global exposure and asset diversification.
There is a growing inclination among the affluent younger generation in India towards investing in startups. Over the past couple of decades, many Indian youth have pursued education abroad, broadening their horizons and networks, to later return and either establish their own businesses or invest in startups. Nitin Chengappa, a managing director at Standard Chartered Bank, highlighted that investing in early stage companies not only diversifies portfolios but also positions them to capture significant returns in high-growth sectors such as fintech, healthcare, and technology.
Consumer goods startups are particularly popular among Indian UHNWIs as they look to capitalize on India’s burgeoning consumption market, which is expected to become the world’s third largest by 2027. These investors seek to be part of the next big success stories in India by supporting companies that offer unique products and cater to the evolving consumer demands of the country.
Aside from real estate and startup investments, India’s affluent are actively exploring alternative investment avenues to further diversify their portfolios. Standard Chartered’s Chengappa noted that ultra high net worth individuals have the capacity to achieve a higher degree of diversification across various asset classes and investment strategies. This has led to an increased focus on alternative investments such as luxury items, with roughly 17% of India’s UHNWIs’ wealth allocated to luxury goods like jewelry, art, and watches.
Equities continue to be a favored asset class for India’s wealthy due to their potential for high returns. K. Joseph Thomas, head of research at Emkay Wealth Management, emphasized that the main investment asset class for the super-rich in India remains equity stocks and equity mutual funds. The Indian equity markets’ upward trajectory is closely linked to the country’s GDP growth and liquidity inflows, particularly in mid- and small-cap companies, adding to the appeal for high-net-worth investors.
India’s ultra-rich are diversifying their investment portfolios across various asset classes ranging from real estate and startups to alternative investments like luxury goods and equities. As India’s economy continues to evolve, these affluent individuals are seeking opportunities that offer both financial growth and personal fulfillment, aligning their investment strategies with the country’s shifting economic landscape.