India’s Uber wealthy diversify 25% of their wealth in commercial realty

According to a survey by Knight Frank, 84% of Indian ultra-high net-worth individuals' investable wealth is allocated between equities, real estate and bonds. Equities constitute the highest proportion of the investable wealth at 34%, with commercial properties, either directly through ownership or indirectly through funds and REITs, making up 25% of their portfolio. The rise in commercial assets as an investment category with high allocation is a sign of improved confidence among investors towards India's growth story. When compared to global and APAC region respondents, who largely represent more mature real estate markets, Indian UHNWIs have greater allocations in commercial real estate at 25%.

Seeking stability in an uncertain environment, 16% of investable wealth of UHNWIs is allocated in bonds. The survey also found that Indian super rich own an average of 5.1 residential properties, compared to the global average of 4.2 units. 37% of the total wealth's allocation is towards primary and secondary homes by Indian UHNWIs, of which 15% allocation towards residential property is held outside India. The United Kingdom, United Arab Emirates, and the United States are the most preferred locations for purchasing homes, while India and Canada round out the top five.

Real estate was the top cited opportunity among 46% of Knight Frank's survey respondents, whether for its attributes as an inflation hedge or due to the benefits of diversification. Many panellists highlighted the opportunity to secure enhanced return profiles as a key advantage. In addition, when investing directly, real estate enables greater control and value-add opportunities. One in ten respondents specifically cited looking for attractive valuations and distressed opportunities. That trend isn't limited to real estate either; equities and the technology sector were tipped by around a third of respondents.

The survey also found that Indian UHNWIs have expanded their orientation from APAC to more global markets in EMEA and Americas. For most Indians buying a property outside of India, United Kingdom was the first preference with 47% respondents showing affinity towards it. This was owing to the fact that UK is a global gateway country and India has business and personal interest in that nation state which has hugely propelled its popularity. Interestingly, the second spot was taken by the UAE (41%), becoming a top destination for Indians to invest. The US (29%) and Canada (18%) were third and fourth on the list, the survey found.

As India emerges as a market of opportunity which is expected to remain in growth mode despite an impending global slowdown, wealth held by UHNWIs is expected to grow in 2023. The optimism of ultra-wealthy on wealth generation here is far higher than their global counterparts and this shall serve as the bedrock of investment and consumption decision. The Indian ultra-wealthy have also demonstrated a growing appetite for property compared to global averages and this bodes well for the real estate market. Going forward, the Indian respondents expect wealth of the ultra-wealthy to continue to increase in 2023.

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India’s Uber wealthy diversify 25% of their wealth in commercial realty

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