India’s billionaire growth is expected to beat the global and regional average, says the Knight Frank report
Globally, 2019 will also see the number of high net-worth individuals exceed 20 million for the first time
India is expected to add 44 new billionaires in the five years to 2023 as the country is poised to report strong economic growth despite near-term uncertainties related to national elections.
The number of Indian billionaires is expected to rise 37% to 163 by 2023, beating the global and regional averages, according to Knight Frank’s latest Wealth Report. The number of wealthy Indians is also expected to surge over the next five years. The number of ultra-high net worth individuals (UHNWIs), or those with net assets of $30 million or more, is expected to grow 39% to 2,697. India will be followed by Philippines (38%) and China (35%). Bengaluru will lead the growth of UHNWIs in India, it adds.
Indian UHNWIs are expected to cut their cash exposure and increase their allocation to private equity in 2019 as their investment strategies become more sophisticated, says the report.
Overall, Asia remains the biggest hub for billionaires, with their number set to rise to more than 1,000 by 2023, accounting for over a third of the world’s billionaire population of 2,696, adds the report.
“Despite softening momentum in the region’s economies, growth prospects in Asia remain favourable in the medium term," said Nicholas Holt, head of research, Knight Frank Asia Pacific. “While China’s economy is expected to slow, emerging markets such as India and the Philippines will deliver some of the strongest growth over the coming years."
India is witnessing a substantial rise in personal wealth and its UHNWI population has grown by 30% in the past five years, fuelling increased appetite for overseas real estate investments.
According to the report, Bengaluru will see a 40% growth in UHNWI population, making it the first among the top five “future cities in the world". The others are Hangzhou, Stockholm, Cambridge and Boston. These cities of the future have been chosen based on factors that will support wealth creation, including innovation indicators, wealth forecasts, economic growth and aspects that improve a city’s growth prospects such as infrastructure. Cities that demonstrate these characteristics are likely to attract property investments.
“... Despite a slide in the Indian rupee against the US dollar, India witnessed growth in UHNWIs due to heightened economic activity and strong performance of the equity markets," said Shishir Baijal, chairman and managing director of Knight Frank India. “Not surprisingly growth has been observed in gateway markets of Mumbai and Delhi by 38%. However, Bengaluru is first among the top five eye-catching ‘cities of the future’ based on their future economic potential."
Around 24% of Indian UHNWIs have property investments, excluding first and second homes, outside India, up from 21% in the previous year. Indian buyers are typically attracted by education opportunities for their children, new business ventures and stable investment returns. While London, Melbourne and Dubai draw significant interest, other markets such as Cyprus, Malaysia and Sri Lanka are also popular with Indian investors.
“Wealth creation in India has been driven in the past by inheritances from older and traditional families, or financial unlocking of real estate. However, in the last decade, first-generation entrepreneurs have been successful in creating wealth by successful equity stake sale through IPOs or private placements," said Prateek Pant, head of products and solutions at Sanctum Wealth Management.
“Many have successfully created consumer-centric businesses, taking advantage of growing aspirations, rising income levels and favourable demographics," Pant added.
Globally, 2019 will also see the number of high net-worth individuals (HNIs), or those with $1 million or more in net assets, exceed 20 million for the first time, according to Global Data Wealth Insight (cited in the report). Around 6.6 million will be based in North America, 5.9 million in Europe and another 5.8 million in Asia.
Oliver Williams, head of Global Data Wealth Insight, highlights the link between entrepreneurialism and wealth creation in the report. “The easier it is to create a business, the more wealthy entrepreneurs there will be—and the more equal wealth is among HNIs," he said.
Knight Frank’s Baijal said that while globally, ultra-high net-worth individuals were showing affinity towards more liquid investments as they are less risky, their Indian counterparts were increasing their exposure to equity and bonds.