The Wealth Report 2022 by Knight Frank has revealed that Indian ultra high networth individuals (UHNWIs); net worth of US$30 million and above, allocated 29 per cent towards buying residential property in 2021. In addition to that, 10 per cent of India’s UHNWIs plan to buy a new home in 2022. Globally, 21 per cent of the ultra-wealthy are expected to purchase a home in 2022.
“Investment in the real estate sector in India has grown in recent times, especially in the wake of the pandemic as real estate was viewed as a safe and tangible investment option amidst the economic volatility. Further, at attractive valuations, real estate continued to drive institutional demand," said Shishir Baijal, chairman and managing director, Knight Frank India. On an average, an Indian UHNWI owns 2.3 homes and 32 per cent of this investor segment rented out their second homes during 2021.
High on the demand list is India as this set of investors prefers to invest in properties in the domestic market, the report said. But international markets, too, are in demand, especially the UK, the UAE and the US.
Apart from residential properties, commercial units are also in demand among Indian UHNWIs. The Attitude Survey, which is a part of The Wealth Report 2022, finds 22 per cent of UHNWIs’ investable wealth was allocated to direct purchase of commercial property (including rental property, offices, etc.) while 8 per cent was allocated towards the indirect purchase of commercial property (including real estate investment trusts or Reits, funds, etc.). Additionally, the survey cited that 8 per cent of the property portfolio was held overseas.
“The governing rules surrounding Reits are regularly updated to augment the scope of these investment instruments in India. Our survey indicates that the investor interest will remain stable in 2022. Interestingly, investors showed preference towards assets such as land development, healthcare, retail and logistics, etc. ESG (environment, social, governance) will continue to gain prominence as key influence in property purchase decisions in 2022," Baijal added.
The survey reveals that 31 per cent of the respondents have invested in offices followed by 15 per cent in retail, residential private rented sector and development land each in 2021. All wealthy investors want more ESG-compliant assets to future-proof their portfolios. In fact, 77 per cent of Indian respondents expect an increasing opportunity in ESG for creating and preserving wealth.