Almost Half Of India’s Ultra-Rich Investing In Commercial Real Estate; Equities, Fine Art Also Popular – Trak.in

According to Kotak Private Banking’s most recent Top of the Pyramid (TOP) Report, 45% of Ultra-High-Net-Worth Individuals (Ultra-HNIs) in India say that commercial real estate is their preferred investment option.

This preference stems from the fact that commercial real estate offers “better leasing terms and higher yields” than residential real estate, which 33% of Ultra-HNIs prefer.

45% of Ultra-HNIs in India Prefer Commercial Real Estate As Investment Option

With an emphasis on luxury assets and digital trends, the 20th edition of the TOP Report examines the investment patterns, spending patterns, and goals of India’s wealthiest citizens.

150 Ultra-HNIs throughout India were surveyed for the report, which was produced by Kotak Private Banking in association with Ernst & Young LLP (EY).

Oisharya Das, CEO of Kotak Private Banking, said, “As India’s economic landscape evolves, our report reveals how Ultra-HNIs are diversifying their portfolios and embracing both domestic and global assets, setting the stage for a significant rise in their spending by 2028.”

At 29% of Ultra-HNIs’ portfolios, real estate is the second most popular asset class after stocks.

Although individual preferences vary, commercial properties are appealing due to their longer contracts, favorable lease terms, and higher rental yields.

47% of global Ultra-HNIs have foreign residential real estate investments, frequently connected to migration plans, and 35% have foreign commercial real estate.

More than half of Ultra-HNIs who are considering or have already made a purchase of residential real estate abroad.

InvITs, which provide dividend income and indirect investment opportunities without direct ownership, are preferred by 21% and 38% of Ultra-HNIs, respectively.

The 2014 Real Estate Investment Trusts Regulations were recently amended by SEBI to permit Small & Medium REITs (SM REITs) with a minimum investment ticket of ₹10 Lakhs and an asset size of ₹50 Crores.

It is anticipated that this action will “democratize the asset class,” allowing for increased retail participation and market expansion for REITs.

With 89% of Ultra-HNIs investing in individual stocks and 32% of their portfolios allocated to them, equities are the most popular asset class.

Indian Ultra-HNIs are becoming more interested in U.S. stocks.

Since the pandemic, Ultra-HNIs have made health and wellness a priority, allocating 10% of their budgets to wellness travel, home fitness, and preventive care.

94% Ultra-HNIs Own Jewellery, 73% Invest in Art

94% of Ultra-HNIs own jewelry, and 73% invest in art, indicating the popularity of collectibles. Fine art, rare coins, vintage wines, vintage cars, stamps, luxury bags, and NFTs are examples of collectibles.

24% of Ultra-HNIs plan to buy more digital assets, indicating that NFTs are now preferred over cryptocurrencies.

In order to ensure a safe estate transfer, 37% of Ultra-HNIs place a high priority on succession planning, collaborating with private bankers and accountants.

A third of Ultra-HNIs have international investments in mutual funds, stocks, and real estate, primarily in the United States and the United Kingdom, and 62% of them favor aggressive equity strategies.

With the primary goal of obtaining permanent residence overseas while maintaining their Indian citizenship, one in five Ultra-HNIs are currently relocating or intend to do so.

Compared to entrepreneurs or inheritors, professionals are more likely to migrate, with 69% citing ease of doing business as the main factor.

In order to make significant changes in their personal and professional lives, 26% of Ultra-HNIs aspire to be viewed as innovators.

IPOs increased as a result of the robust economy in late 2023 and early 2024, with 14% of Ultra-HNIs becoming wealthy from the sale of their main business.

With 268 IPOs in 2024, India topped the world and grew its IPO market share to 30%. PE/VC and M&A activity, meanwhile, decreased.

Sustainable business models with well-defined exit strategies are currently preferred by investors.

For Ultra-HNIs, luxury encompasses more than just pricey goods; it also involves lifestyle, sophistication, and legacy.

Expensive handbags from brands like Hermès, Chanel, and Louis Vuitton are emblems of prestige and ancestry. For example, a Hermès Birkin or Kelly bag is more than just a high-end accessory. valued for their scarcity and rich heritage in addition to their beauty.

Additionally, Mercedes-Benz, Rolls-Royce, and Ferrari are regarded as performance, elegance, and power statements. In watches, Patek Philippe, Audemars Piguet, and Rolex are among the brands that are valued for their craftsmanship, legacy, and technical precision.

Expensive products are regarded as heirlooms and as markers of prestige, artistry, and heritage.

Due to a variety of motivations, the Indian Ultra-HNI is embracing a global identity as they cross national boundaries. According to Saurabh Joshi, Partner in Wealth & Asset Management at EY India, “the Ultra-HNIs segment is one to watch, marked by dynamic growth, evolving needs, and a transformative shift in how wealth is managed and preserved across generations.”