The number of ultra-high networth households (UHNHs) increased by 10 per cent to 160,600 in FY2017 in India with an accumulated networth of Rs 153 trillion, while their number is expected to double to 330,400 by FY2022 with an accrued networth of Rs 352 trillion. This was revealed by the seventh edition of Top of the Pyramid report by Kotak Wealth Management (KWM) today.
As per the report, Indians are getting wealthier at a younger age. For instance, about 60% of UHNIs surveyed for the report were below 40 years as against 47% interviewed in the earlier edition. Also, most of the UHNHs continued to live in metros, while 97% lived in the top-20 cities in India.
Expenditure on luxury goods continued to increase, with higher provisions by professionals reflecting their rising pay packages and upgraded lifestyles. E-commerce helped international luxury brands reach the doorsteps of wealthy consumers in tier-2 and tier-3 cities. Apparel, accessories, and holidays saw sizeable spending while the outlay on jewellery dipped as a percentage of total income allocation. Ultra HNIs were not immune to inflation – allocation of income towards household expenses was sizeable this year, largely attributed by a rise in the cost of commodities such as fuel.
This year, there was greater allocation of income to primary businesses vs. savings. Equity regained popularity as an investment and the share of equity as a source of wealth doubled. Debt and real estate lost some sheen while alternate asset classes, such as alternate investment funds and private equity, gained prominence. Primary businesses continued to be the main source of wealth for entrepreneurs and inheritors, and personal income remained the largest source for professionals. The report noted.
A less-structured approach to investments seems to be more popular. Going forward, equity is likely to remain a preferred asset class, but a rising share of ultra HNIs plan to invest more into alternate assets in order to achieve their long-term financial goals and to diversify their portfolios. Investments into debt are likely to fall.
The report said that ultra HNIs have been adopting a more structured approach to health and wellness for a while now and most follow some sort of a fitness regime. Exclusive memberships to health clubs or select gyms were very popular, and so were multi-equipment home gyms.