Living a dream. Well yes, India?s high net worth individuals (HNIs) are. Thanks to their passion investments. Fine art, luxury automobiles, private yachts and not to miss private jets, all find a place in their list of must haves. With the number of Indian dollar billionaires increasing five times, from just 120 in 2000 to 602 in 2010, the passion investment scene is just getting hotter. Even as experts remain divided about the bracket that constitutes the HNI segment, a general consensus clocks them as individuals having investable assets of more than $1 million, excluding primary residence, collectibles, and consumer durables.
Anand Ramanathan, KPMG advisory services manager, points out, ?Despite rising costs and financial downturn in the recent past, HNIs in India have spent considerable money on passion investments such as tangible luxury items, including fine art, luxury automobiles, private yachts, sports teams, jewellery, and intangible passion investments, such as ?live the dream? vacations. The trend is expected to continue in the future as well.?
The World Wealth Report 2009 points out that in 2009, India?s HNI population shrank 31.6% to 84,000, the second largest decline in the world, after posting the fastest rate of growth (up 22.7%) in 2007. However, it stated that while in the past the BRIC nations were viewed together as decoupled engines of global GDP growth, Brazil and India will likely support global growth in the current environment. The Report by Capgemini and Merrill Lynch forecasts that by 2013, global HNI financial wealth will recover to $48.5 trillion, with Asia-Pacific overtaking North America as the largest region for HNI financial wealth. It states that Asia-Pacific?s growth will be largely driven by domestic consumption in two of the region?s key markets?China and India?which are forecast to grow at a compound annual growth rate of 9.7% and 7.9%, respectively, during 2009-2013.
The region is expected to focus on domestic demand to reduce its reliance on exports of goods and services for growth.
Globally, the financial crisis and economic uncertainty of 2008 had a substantial impact on HNI investments of passion and lifestyle spending, with luxury goods makers, auction houses, and high-end service providers reporting significantly reduced demand worldwide. The Report mentions that in the art-mart, more European (30%) and Latin American (27%) HNIs invested in fine art than did their Asian (23%), North American (21%), and Middle Eastern (17%) counterparts. Jewellery, gems and watches attracted the third-largest share of passion investment (overall 22%), and the top allocation was in Asia and the Middle East, as they are perceived as ?safer?, tangible investments that might retain long-term value. Health and wellness was the only lifestyle spending category to see a significant increase in spending within the Asia-Pacific region (64%), which includes activities like high-end spa visits, fitness equipment installations, and preventative medicine procedures like full body scans.
HNIs in India spend a lot on house and property. As is evident from the majestic 27-floor skyscraper Antilla (named after the legendary island off the coast of Portugal) on Altamount Road in posh south Mumbai that Reliance chairman Mukesh Ambani reportedly gifted his wife. As per reports, Vijay Mallya owns penthouses in London, Monaco, New York, Johannesburg and Los Angeles, a Scottish castle, several South African game lodges, not to forget a house on the most happening beach in Goa.
And its not just homes that are a fancy with HNIs, yachts and private jets, too, are hot property. Fathom this: IPL commissioner Lalit Modi reportedly owns a private jet, luxury yacht and a fleet of Mercedes and BMW cars. Mukesh Ambani had reportedly gifted his wife Nita Ambani a luxurious Airbus 319 corporate jet worth nearly Rs 250 crore. As per reports, Mallya owns two helicopters, two private jets, a stud farm and a stable of 250 thoroughbreds, as well as a 165-foot yacht, Indian Empress, which is powered by three 10,000hp engines.
Gulfstream Aerospace Corp and Bombardier?business jet makers?are eyeing the Indian market closely. Canada-based Bombardier forecasts 1,030 deliveries will take place in the next 10 years (2009-18) and that includes 250 business jets for India and 300 for China. Tina Ambani, wife of billionaire Anil Ambani, has reportedly bought a 100m-long yacht that can host at least 20 people besides the crew, for Rs 200 crore ($46.8 million), joining the private yacht club. Shakeel Kudrolli, managing director of Acquasail, which represents Chantiers Beneteau SA, a leading yacht company, had reportedly mentioned how India is increasingly catching up with the US and Europe when it comes to buying specialised personal yachts. Sachin Jain of Lladro says, ?We cannot have CCP??cut copy paste??in India. HNIs have to be dealt as individuals. You have to develop a relationship and cater to their needs.?
Ramanathan rounds up: ?HNIs are brand conscious and like to do a lot of shopping, though most of the time the spouses do the shopping for them!?
