India’s economic recovery is well and truly under way if one were to track the growth of ultra high net worth households/individuals (UHNHs/UHNIs) in India.
The number of Indian UHNHs rose 16 per cent to around 117,000 in FY14, according to a report by Kotak Wealth Management, Top of the Pyramid .
UHNIs are those with wealth exceeding Rs. 25 crore and the report said their number could triple in the next three years. UHNHs net worth is projected to grow at CAGR of 34 per cent from an estimated Rs. 104 lakh crore in FY14 to Rs. 408 lakh crore in FY19, it said.
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The report followed a detailed market survey of 150 UHNIs by Feedback Consulting and Ernst & Young (E&Y) and was conducted between February and April 2014.
Releasing the report, C. Jayaram, joint MD, Kotak Mahindra Bank said the report “aptly captures the mood and behaviour of the super-rich against the back-drop of all-round emerging optimism in the economy”.
The survey was conducted before election results and Mr. Jayaram was confident that “next year will report even more dramatic positive changes”.
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He said the HNIs were returning to equity markets compared to the lull for the last five years. “Investors had earlier preferred fixed income investments but equity allocation rose from 35 per cent in 2012 to 38 per cent in 2013 while debt investments reduced to 24 per cent,” he said.
Murali Balaraman, Partner, Advisory Services, E&Y said non-discretionary spends have gone up from 30 per cent of total income in 2012 to 44 per cent in 2013. “Spending on jewellery (16 per cent), apparel & accessories (15 per cent), followed by luxury travel (14 per cent), indicates family-orientation in expenditure planning,” he said.
On the preference for private equity (PE), the report said nearly 26 per cent of UHNIs allocated some part of their total investments in PE with higher returns being the primary driver. More than 53 per cent UHNIs preferred exposure to the real estate sector followed by IT (43 per cent) and pharmaceuticals (42 per cent).