Indian UHNWIs allocated 29% of wealth towards purchase of residential property in 2021

                India’s ultra-high-net-worth individuals plan to buy a new home in 2022 led by the growing number of UHNIs in the country. Indian UHNWI prefers to invest in properties in the domestic market (home country 
India),

followed by international markets of UK, UAE and US, mentioned in a Knight Frank Wealth Report 2022.

As per the report currently, 29% wealth of Indian UHNWIs is allocated towards purchase of principal and second homes. Further, 22% of UHNWIs’ investable wealth was allocated towards direct purchase of 
commercial property (including rental property, offices etc.) while 8% was allocated towards indirect purchase of commercial property (including REITs, funds, etc.). Additionally, the survey cited that 8% of the 
property portfolio was held overseas.These UHNIs have a net worth of US$ 30 mn and above.

“Investment in the real estate sector in India has grown in recent times especially in the wake of the pandemic as real estate was viewed as a safe and tangible investment option amidst the economic 
volatility. Further, at attractive valuations, real estate continued to drive institutional demand. The governing rules surrounding REITs are regularly updated to augment the scope of these investment 
instruments in India. Our survey indicates that the investor interest will remain stable in 2022,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

Globally, 21% of the ultra-wealthy are expected to purchase a home in 2022. The report further highlighted that on an average an Indian UHNWI owns 2.3 homes and 32% of the Indian UHNWIs have rented 
out their second homes during 2021. The survey further reveals that 31% of the respondents have invested in office followed by 15% in retail, residential private rented sector (PRS) and development land 
each in 2021.

“The Wealth Report confirms a clear rise in demand for residential property - with 26% of global UHNWIs looking to buy a new home in 2021, a sharp increase from the 21% we revealed in 2020. Demand is 
especially strong for rural and coastal properties, with access to open space being the most highly desired feature. The pandemic is super-charging demand for locations that offer a surfeit of wellness - think 
mountains, lakes, and coastal hot-spots 

Demand will help fuel price rises of up to 7% for our key markets this year,” said Liam Bailey, Global Head of Research at Knight Frank.

According to Knight Frank’s The Wealth Report 2022, the value of the Prime International Residential Index (PIRI 100) increased by 8.4% in 2021, up from approximately 2% in 2020, its highest annual 
increase since the index was launched in 2008.

Globally, Bengaluru (ranked 91 st) and Mumbai (ranked 92 nd ) recorded a marginal growth of 0.3% YoY in 2021 in terms of luxury residential prices.

Delhi (ranked 93 rd ) remained unchanged in regards to prime residential prices. “A period of recalibration is likely in 2022 as housing markets regain some of their usual seasonality and borders reopen, with 
COVID-19 suppressors – rather than eliminators – winning out. This will enable cross-border transactions to slowly recover; a key component of demand that has been largely absent from prime markets 
since the start of the pandemic,” said Baijal.

The report mentioned that the India has ranked 3rd in terms of billionaires’ population in 2021 following the US and China. The number of ultra-high-networth-individuals (UHNWIs) has globally increased by 
9.3% in 2021 over 51,000 people have seen their net assets increase to US$30m or more.

In India, the number of UHNWIs (net assets with US$ 30m or more) has grown by 11% YoY in 2021. The number of UHNWI population in India is expected to grow by 39% between 2021- 2026, with 19,006 
people expecting to have net assets of US$30m or more by 2026.

Globally, it is estimated that 135,192 UHNWIs are self - made and under the age of 40, accounting for around a fifth of the total UHNWI population. India has ranked 6th in percentage growth of the UHNWI 
population that is selfmade and under the age of 40 years.

While Delhi has witnessed an increase of 101.2% followed by Mumbai (+42.6%) and Bengaluru (+22.7%) in the last five years. However, in the next 5 years, Bengaluru is projected to witness an increase of 
89% of the UHNWI population and become home to 665 ultra-wealthy individuals by 2026.

Source: The Economic Times