As the economy bounces back and the days of the Lehman-crisis seem almost like a bad dream, India’s rich are back to buying what they?re passionate about: luxury automobiles, boats, jets and homes. And wealth managers like Citibank, Deutsche Bank and Standard Chartered Bank are making more money than ever from the ?exotic or specialty financing’ business.
With Alibaug having emerged as a destination to invest in weekend homes?given that it is few hours drive away from the city and few minutes away by a speed boat?there are more takers now for luxury boats. ?Mumbaikars want to sail off over the weekend and get back to work on Monday mornings, explains Ajay Bagga, head-private wealth management, Deutsche Bank. Bagga confirms the uptick in exotic financing in the past six months. ?Boats can save time and a luxury yacht come for about Rs 50 lakh,?’ he said, adding that such buys can be funded at 200 basis points over the London interbank offer rate (Libor). Confirming the trend, Tashwinder Singh, MD and head, Citi Private Bank India said, ?There has clearly been an uptrend in client interest in specialty financing in the past few months against 2009 period.? Singh adds that the preference seems to be for onshore leisure assets such as private jets and yachts, augmenting overseas leisure expenditure.
Anshu Dutta, MD (marketing) Marine Solutions Distribution & Services, a company dedicated to the leisure boating industry, said that he has seen a 100% increase in business in 2010 after a lean 2008-09. ?Everyone wants a luxury boat now,? she said. One shipping analyst quantified the size of the luxury boat market at more than Rs 500 crore now up from Rs 400 crore in 2008-09.
?Most investors are back where they were before the downturn having recovered their notional losses. With more wealth, there has been a resurgence in demand for luxury items,? Standard Chartered Bank GM & head (wealth management) Vishal Kapoor said. ?The number of high networth Indians in India is growing at 20% a year, second only to Singapore,? Pranab Datta, head of Knight Frank India said. In terms of luxury holiday homes, Goa was traditionally the favoured destination, but many rich Mumbai residents are now buying seaside properties in the resort of Alibaug two and a half hours drive south of the city or a 15-minute hop by speedboat. ?Five-acre properties can cost up to $8 million to $10 million, said Anand Narayanan, head of residential sales for Knight Frank India.
Luxury collectibles like luxury automobiles, boats and jets accounted for 30% of high networth individuals? total passion investments in 2009, up from 27% a year earlier, according to the 2010 world wealth report published by Merrill Lynch Wealth Management and Capgemini. Major increases were recorded in Europe, Latin America and Asia-Pacific excluding Japan, the report noted. Auction houses, luxury goods makers and high-end service providers that reported signs of renewed demand later in 2009, expect spending to be robust in 2010. For instance, most premium car brands, including BMW and Audi, are forecasting strong growth in 2010 particularly in emerging markets, added the report. The luxury car-maker Audi has seen a 208% increase sale at 357 units in October, as against 116 units in the year-ago period. The company has achieved 75% growth at 2,535 units during January-October this year, as against 1,449 units in the same period last year.