Investment in prime property set to rise
India should witness the fastest growth in the number of billionaires by 2024 as per the Knight Frank Wealth Report 2015
Knight Frank released its ninth edition of the Wealth Report last week. This yearly issue provides a unique insight into the attitudes of ultra-high-net-worth individuals towards property, investments and spending patterns across the globe and provides an annual analysis of wealth flow and property investment around the world.
INDIA KEY FINDINGS
- Over the next ten years, only USA, China and Russia will have more billionaires than India
- Globally, India’s UHNWI ranking shall improve from 20th in 2014 to 19th by 2024
- Within India, Mumbai will see the fastest rise in UHNWIs followed by Delhi and Hyderabad
- The top six cities in India contribute 58% of the total UHNWIs in the country. This number will further rise to 68% by 2024.
- Investments of passion becoming more popular – Watches, art & jewellery are the top draws for wealthy Indians
- Nearly half of the Indian UHNWIs’ investment portfolios are allocated to property, the highest across the globe, followed by the Australians at 42%
- Globally, Bengaluru is among the limited number of property markets that witnessed double digit price growth.
- Globally, Mumbai is costlier than Dubai in terms of owning Prime Residential Property
Speaking about the findings, Shishir Baijal, Chairman & Managing Director, Knight Frank India, said “Wealth creation in India is expected to accelerate with the number of UHNWIs expected to double over the next decade. This reflects a more positive outlook for India’s economy after 2014 was marked by capital outflows and a sharp devaluation of the rupee.
As for the real estate sector, over 90 per cent of the wealth advisors in India have claimed that their clients will most likely invest in property and this sentiment was echoed throughout most parts of Asia. This is good news for the sector which has off late been passing through rough weather, and we eagerly look forward to these developments.”
Dr. Samantak Das, Chief Economist & Director, Research, Knight Frank India, said, “Indian UHNWIs have given a positive outlook towards wealth creation and their decisions relating to the purchase of real estate property.
Although not purely for investment purpose, a quarter of Indian UHNWIs are contemplating purchase of another home in 2015.
From an investment perspective, as high as 87% of Indian UHNWIs wish to increase allocations towards prime residential property which bodes well for the real estate sector. In spite of the government of India taking bold steps towards financial inclusion, wealth concentration continues to remain a challenge.
At 0.1 UHNWI per lakh population, India ranks a distant 84 among 97 countries globally in terms of equitable distribution of wealth.
The concentration of wealthy Indians also extends geographically as the top 6 cities contribute 58% of the number of UHNWIs, which is likely to accelerate to 68% in the next 10 years.”
Threats and facilitators
Key findings of the fifth instalment of the annual Attitudes Survey in the Knight Frank’s Wealth Report 2015:
Wealth threats
- Globally, family succession issues were the number one worry, with 85% of respondents saying their clients were concerned about the handover of family wealth to the next generation.
Property investment
- Property is increasingly seen as a mainstream investment class, accounting on average for 38% of an Asian UHNWI’s investment portfolios. Nearly half of the Indian UHNWIs’ investment portfolios are allocated to property, the highest across the globe, followed by the Australians at 42%.
- Globally, 37% of survey respondents said their clients increased their exposure to property as an investment in 2014 and 35% expect that trend to continue in 2015. In Asia, 22% respondents said their clients increased their exposure to property as an investment in 2014; and 27% expect that trend to continue in 2015, with Japanese UHNWIs (67%) at the highest globally.
- Residential property is the most popular sector to invest in, with 84% of wealth advisors in Asia saying their clients were becoming more interested in it, except for the Indonesians who prefer offices to residential property, and the Malaysians who show most interest in retail. Offices (68%) were the next most popular property type for Asian investor, with the exception of Australian UHNWIs preferring infrastructure and warehousing/industrial property, and the Japanese preferring retail.
- An astounding 92% of the wealth advisors in Australia and India said that their clients will most likely invest in property within their own countries. This sentiment was echoed throughout most parts of Asia, except in Hong Kong where the wealth advisors said 65% of the super-rich prefer investing abroad.
- Control of their property investments is clearly important to the wealthy – over 90% of respondents in Asia said UHNWIs prefer to invest directly into property; in Australia, it was a full 100% consistent response for direct ownership.
- Property investment via a fund vehicle does not seem to take off at all in Asia Pacific, with the exception of China, India and Malaysia who suggested that less than 10% of their clients would invest in this way.
- Bricks and mortar retain their appeal for the latest generation of UHNWIs, with 43% of respondents in Asia saying their younger clients were more interested in property than their parents – this is especially so in Japan (58%), Malaysia (59%) and Singapore (59%).
- Across the world, on average 23% of UHNWIs’ wealth is accounted for by their main residence and any second homes not owned purely as an investment, according to our survey results. In Australasia and Asia the proportion edges up to almost 30%, led by India and Singapore at 33%.
Source :- DNA
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