NEW DELHI: India's booming economy has led to a surge in investment among the country's ultra-wealthy in expensive watches, art and other luxury collectibles. Luxury symbols of wealth, such as Rolex watches and MF Hussain artwork, provide the ultra-wealthy with not only status but also potentially significant profits. For India's 1%, which accounts for 40% of the country's wealth, rare watches and exquisite works of art offer a way to diversify their portfolios.
According to Knight Frank's Wealth Report 2024, nearly 17% of India's ultra-high-net-worth individuals (net worth of $30 million or more) will use their investable assets to purchase coveted collectibles in 2023. . But Indians still love real estate. According to the report, 32% of India's ultra-high-net-worth individuals invested in real estate last year.
According to the report, by 2023, luxury watches will be the top luxury investment for India's ultra-high net worth individuals, followed by fine art. Jewelry is also on the list.
This was in contrast to global tastes where art reigned supreme, followed by watches and classic cars. India's ultra-high-net-worth individuals also invest in wine and rare whiskies, but relatively little compared to the rest of the world. The report does not consider real estate to be a luxury investment.
Shishir Baijal, chairman and managing director of Knight Frank India, said Indians have long appreciated different types of collectibles and this is the driving force behind the growth.
According to the report, these categories hold promising returns in both domestic and international markets. “Demand for rare collectibles is growing across age groups in India, and as wealth continues to rise, we expect further investment in these asset classes,” the company said.
The number of ultra-high net worth individuals (UHNWIs) in India will grow by 6.1% in 2023, and over the next five years the number is expected to increase by 50% from 13,263 to 19,908, much higher than the global average . .
The number of HNWIs in the world is expected to increase by 28.1% to 8.02 billion by 2028. In 2023, the number of HNWIs will increase by 4.2% to 626,000 million from 601,000 million the previous year. About 90% of India's ultra-high-net-worth individuals expect their wealth to increase this year, with about 63% of them expecting their wealth to increase by more than 10%.
The report added that 32% of India's ultra-high net worth individuals invest in real estate. Interestingly, almost 14% of their combined housing portfolio consists of properties located outside India.
About 12% of India's ultra-high-net-worth individuals plan to buy a new home in 2023, and a similar proportion plan to buy a new home in 2024, the report said. This is lower than the global average of 22%. The average Indian ultra-high-net-worth individual owns 2.57 homes and a significant 28% will rent out their second home during 2023.
According to the Knight Frank Luxury Investment Index, which tracks 10 popular luxury goods stocks, art was the best performer in 2023, with prices rising 11%. Other luxury assets such as rare whiskies, the company said, still hold long-term value and have generated returns of 280% over the past 10 years.
The report said that while auction house sales hit record numbers in 2023, the Luxury Investment Index ended the year with only a marginal increase, as the value of some assets declined or rose minimally. It added that it had declined. But experts said this was not a cause for major concern and may have been a market correction, with some losses simply reflecting the stabilization of previously inflated assets. .
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