All isn’t doom and gloom for India’s economy, with some rare good news finally coming for it, especially for its real estate sector. A global wealth and investment report has found that India recorded the second highest increase in high net worth individuals (HNI) – those having investable assets worth over $ 1 million — in the world.
India, which witnessed a steep decline in its HNI population in 2011, saw it grow it by 22.2% in 2012, while their wealth rose by 23.4%. As against 84,000 HNIs in 2008 and 1,25,000 HNIs in 2011, India was home to 153,000 HNIs in 2012 . A further look at how these super-rich in India — together worth $589 billion — were investing their money will bring cheer to the real estate sector.
In line with the investing behaviour in the entire Asia-Pacific region, excluding Japan, Indian HNIs invested most in real estate (26.5%). The balance of HNI portfolios were allocated to cash and deposits (22.7%), fixed income (17.7%), equities (17.4%) and alternative investments (15.8%). Allocation to alternative investments at 15.8% was the highest in Asia-Pacific.
Capgemini and RBC Wealth Management’s 2013 World Wealth Report (WWR) said that the global MSCI benchmark index, which is a global equity benchmark, increased 13.2%, with robust performances by Germany (27.2%), Mexico (27.1%) and India (23.9%). The report said in India, reform measures and monetary easing helped equity markets gain by 23.9%.
Globally, Hong Kong experienced the most significant gains in HNI population and wealth in 2012, ahead of India. Hong Kong’s HNI population grew by 35.7%, and their wealth by 37.2%. Wealth growth was the strongest in Asia-Pacific at 12.2%. followed by North America at 11.7%. The WWR said: “The fastest-growing HNI markets are located in Asia-Pacific. Hong Kong experienced a 35.7% increase in its population of HNIs, propelled by a combination of relatively less conservative investing behaviour among many HNIs and strong equity markets.
India, with 22.2% growth, benefitted from positive trends in equity market capitalization, gross national income, consumption and real estate. Both Hong Kong and India, which are notoriously volatile, overcame their poor performance in HNI population growth in 2011 — Hong Kong lost 17.4% while India lost 18%.”
More than half the global HNIs population continued to be concentrated in three countries — the United States, Japan and Germany. For the past three years, individuals in these countries have accounted for roughly 53% of all HNIs, down from 54.7% in 2006. However, the market share of the top three countries is expected to erode over time as emerging markets increase in prominence.
The WWR added: “Asia-Pacific is expected to become the largest HNI wealth market as early as 2014. Asian markets are expected to expand annually by 10.9% and 9.7% respectively (in 2013 and 2014) through 2015.”
HNI population and wealth reached record levels in Asia-Pacific in 2012, propelling global growth. Since 2007, Asia-Pacific has increased its HNWI population by 31% and its wealth by 27%, well in excess of the rest of the world increases of 14% for HNWI population and 9% for wealth”.
Asia-Pacific built on this trend of strong performance in 2012, its HNWI population expanding by 9.4% to reach 3.68 million and their wealth by 12.2% to reach $12 trillion.
Jean Lassignardie from Capgemini Global Financial Services said “GDP growth of 5.5% which is more than double the global average, combined with strong equity market performance across the region and strong real estate market performance in some markets, drove robust growth in Asia-Pacific’s HNWI population and wealth in 2012”.
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