Most ultra-high net-worth individuals still consider residential property as the safest asset class, followed by gold. A huge 67 per cent of them are worried about inflation and want to expand their property investments as a hedge against inflation
As huge 88 per cent of ultra-high net-worth individuals (UHNWI) in India saw their wealth grow in 2022 compared to the global average of 40 per cent. For 2023, 100 per cent of UHNWI are expecting their wealth to grow compared to the global average of 69 per cent.
Also, self-made Indian UHNWIs under 40 comprised 19 per cent of the total UHNWI population, compared to the global average of 40 per cent.
These statistics aside, the downward trends set in by the Covid-19 pandemic still casts its shadow.
Globally, inflation, the Russia-Ukraine War, energy crisis and so on continue to affect the wealth of UHNWIs. The aggregate wealth held by UHNWIs dipped by 10 per cent globally. The dip was the same in the Americas, but more pronounced in Europe, where it dipped by 17 per cent. The dip was the least in Africa at 5 per cent, followed by Middle East and Asia at 7 per cent each, and 11 per cent in Australasia, Knight Frank said in its Wealth Report.
Residential Property Trumps Gold
Residential property is still considered to be the safest of asset class, followed by gold, bonds, commercial property, and equity markets in second, third, fourth and fifth places. Cryptocurrencies was ranked as the least of the safest assets for wealth creation.
According to the report, most UHNWIs (45 per cent) cited investment as the primary reason behind buying a residential property. They considered it to be the best hedge against inflation.
Less than half (21 per cent) cited lifestyle choices and an even lesser (16 per cent) cited property as a safe haven behind their purchase decision. About 9 per cent cited job relocation and 8 per cent cited education goals as reason behind buying property, again highlighting the point that they considered it as a good hedge against inflation.
A huge 31 per cent of those surveyed said that capital appreciation would be their biggest goal for wealth in 2023. This was followed by 28 per cent who cited capital preservation, 23 per cent who cited income generation, and 14 per cent who cited diversification as their primary goals for wealth.
About 67 per cent said they worried about inflation and 46 per cent said they would want to invest in real estate. About a third of them said they wanted to expand their property holdings, while 29 per cent said they were looking to deleverage.
Spending
On an annual scale, the wealthy spent most of their wealth on collecting art (29 per cent), cars (25 per cent), watches (18 per cent), handbags (15 per cent), wine (10 per cent), coins (8 per cent), jewellery (6 per cent), furniture and coloured diamonds (4 per cent each), and rare whisky bottles (3 per cent).
On a 10-year scale though, rare whisky bottles outclassed all other luxury at a whopping 373 per cent). Cars come second at 185 per cent, followed by wine at 162 per cent, watches at 147 per cent and art at 91 per cent.