1.46 Lakh Ultra High Net Worth In India, Growth Slows In FY16: Report

Mumbai: Growth of ultra high net worth individuals (UHNIs) in India slowed to under seven per cent to reach 1.46 lakh at the end of 2015-16, according to a report.

The total wealth of the ultra HNIs, or those with a net worth of over Rs 25 crore, grew 5 per cent to Rs 135 lakh crore, a report by Kotak Mahindra said on Tuesday.

Even though the growth in the number of ultra HNIs as well as their wealth slowed down, the report estimated that the community will grow to 2.94 lakh with a combined net worth of Rs 319 lakh crore over the next five years.

This will be driven primarily by emerging sectors and newer avenues of investments promising higher returns, it said, adding that smaller cities will also house an increasing number of the ultra rich.

The report, prepared by professional services firm EY for Kotak Mahindra Wealth, said the average age of the ultra HNIs is also falling and nearly half of the 1.46 lakh are under the age of 40.

Going by their investment preferences as per asset classes, 39 per cent of the money went to equities, followed by 28 per cent in real estate, 22 per cent in debt while alternate investments accounted for 11 per cent.

Equities found less favour due to the subdued markets which led to a spurt in allocations in other asset classes, it said, adding that 72 per cent of this universe invested in commodities.

Impact investing or investment which does good for the society is also gaining traction, with 44 per cent of the ultra HNIs having an exposure to it, the report said. 

Financial services, affordable housing, clean and renewable energy are the favourite avenues.

"Ultra HNIs are increasingly getting involved in renewable energy initiatives - be it on the investment side or even embedding it into their daily life," EY partner for advisory services Murali Balaraman said.

The report, for which over 250 individuals were interviewed, said 98 per cent of the ultra HNIs considered succession planning as critical.

While wills continue to be the most common instrument of choice among the UHNIs, forming trusts is also gaining traction, it said.

On the spending side, wearable devices such as smart watches, fitness bands, virtual reality headsets and headphones are popular, with the UHNIs looking at them as status symbols.

Nearly 57 per cent of the UHNIs have incorporated such effects as part of their lifestyle. Contrary to popular assumption, there were higher adoptions in the 36-50 age group rather than those below 35 years, it said.