NEW DELHI: The number of Ultra High Networth Households (UHNH) in India increased 7% to around 146,600 in FY16, according to the latest report Top of the Pyramid by Kotak Wealth Management. These households represent an accumulated net worth of Rs 135 lakh crore, a growth of 5% over last year and 18% compounded growth over the last five years.
Interestingly, the average age of Ultra High Networth Individuals (UHNI) is reducing with nearly half being below 40 years of age. By FY 2021, the number of UHNHs is estimated to increase to 294,000 with a combine net worth of Rs 319 lakh crore. Around 45% of the Ultra High Networth Households are based out of emerging cities and small towns.
Dipak Gupta, joint managing director at Kotak Mahindra Bank said India emerged as one of the strongest larger economies in the world, despite bumps such as the stress in the banking sector and a choppy stock market performance. “For UHNIs, last year’s positivity flowed through into this year with reforms taking root, inflation under control, and economic growth looking up,” he said.
In FY16, 39% of UHNI investments were directed towards equity, 28% to real estate, 22% to debt and 11% to alternate investments. “Equity found less favour amongst ultra UHNIs this year, because of subdued performance, which in turn lead to a corresponding rise in other asset classes such as real estate, debt and alternate assets,” the report said. “Commercial properties were the biggest and most stable attraction in the real estate market.”
“Commodity investments too are gaining confidence of UHNIs, with nearly 72% of them invested in this asset class. Gold and silver continue to be the most preferred metals,” it said. For UHNIs, wearable devices such as smart watches, fitness bands, virtual reality headsets, and head phones are becoming popular with a whopping 81% seeing these devices as a status symbol. Almost 57% UHNIs have incorporated them as part of their lifestyle.
The report said that nearly 98% of UHNIs believe that succession planning is a continuous and proactive process. “They often choose children and high potential family members as the pool of potential successors. Though trusts are gaining traction, wills are the most common instrument of choice. Most visit their succession plan at least once in five years,” said the report.
Murali Balaraman, partner – advisory services at Ernst & Young said overall, the investment mood has remained positive. “The rate cuts have led to fall in lending rates resulting in improved ultra HNI sentiment and increased investments into primary businesses,” said Balaraman.
The report had two interesting findings on the lifestyle of UHNIs. They continue to spend high across jewellery, apparel & accessories, holidays and thus seem pretty much unaffected by global uncertainty. Secondly ultra HNIs are increasingly getting involved in renewable energy initiatives, be it on the investment side or even embedding it into their daily life.
Credits ET Realty