Knight Frank Wealth Report shows that Indian UHNWIs still bet on property investment

[] Mumbai has been ranked 21, ahead of other global cities like Toronto, Washington DC and Moscow in the city wealth index, while Bengaluru has emerged as one of the top seven preferred destinations for private property investors, says a report by Knight Frank

The annual increase in the number of ultra-high net worth individuals (UHNWIs) in India is all set to double during the next decade, according to global property consultancy, Knight Frank’s 11th edition of The Wealth Report 2017.

There will be an addition of 1,000 UHNWIs annually in the country over the next decade. In the last 10 years, the country has seen additions of around 500 new UHNWIs or those with USD 30 million or more in net assets, annually. Consequently, the country’s financial capital Mumbai, ranks 11 in the ‘future wealth’ category, ahead of global cities like Chicago, Sydney, Paris, Seoul and Dubai. Mumbai is currently ranked at 21, in the ‘city wealth index’, ahead of Toronto, Washington and Moscow, while Delhi at 35, is ahead of Bangkok, Seattle and Jakarta. Bengaluru is among the top seven hotspots around the world that present exciting opportunities for private property investors, in 2017 and beyond, the report added.

According to Samantak Das, chief economist and national director-research, Knight Frank India, in terms of real estate sector investment, the wealthy Indians have expressed their top priority in the office segment, while logistics has also seen a three-fold rise.

Even though the residential market in the country is reeling under pressure, 40% of wealthy Indians are likely to invest in residential property in India in the next two years, while 25% are keen for overseas avenues, he added.

Impact of Donald Trump and demonetisation

The country houses 2% of the world’s millionaires (13.6 million) and 5% of the world’s billionaires (2,024). The report tracks the growing super-rich population in 125 cities across 89 countries. This year’s survey results are based on responses from almost 900 of the world’s leading private bankers and wealth advisors. Talking about the impact of Donald Trump, the new president of the USA and the note-ban, on the country’s UHNWIs, he said that although there is no direct impact visible, still, indirectly, they have been affected badly. Besides, concerns are there in the real estate industry, due to the note-ban, but there is no change in terms of office space transactions, he said. Das was quick to add that the growth in the real estate sector may be subdued at present, but it is all set to improve within the next six months.

Preferred investment destinations

According to the report, the country has witnessed a 12 per cent increase of UHNWIs between 2015 and 2016 and is expected to grow at 150 per cent over the next decade. The report indicates that developed markets are still an important destination to invest for UHNWIs of the developing nations.

[] A guide to creating wealth with residential real estate investment

The UHNWIs in India prefer countries like Singapore, UK, UAE, US and Hong Kong for owning a home. However, the global wealthy give more preference to European countries, the report said. The report says that 27% of Indian UHNWIs have already invested in collectibles such as art, wine or classic cars.

According to the survey, income returns do not feature in the top five priorities for UHNWIs in the country. However, they cite potential fall in asset values and political uncertainty, as the major threats to wealth creation in the next five years. India ranks 6th in terms of the growth rate of UHNWIs for 2016. With the current pace, the country is expected to move up to the 3rd spot over the next decade, the report said, adding that the number of UHNWIs in the country has increased by 290% during the last decade.

City-wise growth in UHNWIs

Zooming in on the percentage growth forecast over the next decade, Pune (170%) tops the list, followed by Hyderabad and Bengaluru (both at 160%), Mumbai (150%) and Delhi, Chennai and Kolkata (all at 140%). There are a total of 6,740 UHNWIs in the country and Mumbai leads the race with 1,340 UHNWIs followed by Delhi (680), Kolkata (280) and Hyderabad (260) UHNWIs.

Indian cities that saw a rise in UHNWIs compared to 2015, include Pune (18%), Hyderabad and Bengaluru (both at 15%) and Mumbai (12%). In terms of most expensive prime residential property, Mumbai climbed up to rank 15 from 18 last year, ahead of Istanbul, Melbourne and Dubai, the report said.

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Debora Berti

Università degli Studi di Firenze, IT

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