The average age of HNI and UHNI investors has been dropping, accompanied by significant wealth creation in recent years. This has also translated into improved risk appetite, with investors becoming increasingly well informed. Consequently, riskier products like equities, higher allocation to alternate asset classes with a bias towards the unlisted space, and private credit have gained substantial traction.
Further, diversification beyond traditional asset classes and global diversification are achieved through offshore investments.
With the wide array of investment opportunities, worldwide, global investing is a great way to achieve diversification benefits.
For instance, the equity alternatives side is seeing a high interest in the regenerative AI space. Many clients want to build portfolios in future leaders of AI and cutting-edge technology, however access to these companies is limited. This makes offshore an attractive space for UHNI/HNI investors.
Private credit funds are emerging as an alternative investment option for the UHNIs/HNIs. Banks globally have been lending lesser and lesser in sponsor-led acquisition deals and to mid and small-size corporates and Private Credit has really taken that space now. In light of these dynamics, Private Credit funds are seeing a lot of interest from investors as well.While there are many more takeaways from the Knight Frank Wealth report, when it comes to luxury investment ideas, these ultra-rich individuals are actively considering passion investments such as watches, art and jewelry, having spent 17 percent of their investable sum in these luxury assets last year.Most of these investments have a progressive intrinsic value, significant appreciation prospects, cultural relevance and a status value.
However, luxury preferences vary among UHNI and HNI clients. Commonly witnessed, five trends in luxury products and unconventional choices that are gaining popularity among Indian UHNIs/HNIs are as below:
1. Luxury realty
Living in luxury begins with a prime estate, surrounded by premium amenities and a unique lifestyle. Primary real estate has always been an important asset class and with the burgeoning UHNIs/HNIs community, the affinity for luxury real estate has become a popular investment avenue. In fact, the luxury property market within India is on an upward trajectory since 2022, going up from Rs 2,859 crore to Rs 4,319 crore in 2023, as per a JLL India analysis. Another survey conducted by India Sotheby’s International Realty (ISIR) says 71 % of the wealthy have expressed a positive intent to invest in luxury real estate over the next 12-24 months. Apart from primary residences, these individuals prefer diversity in owning real estate assets, ranging from commercial real estate, holiday homes, agricultural land, and farmhouses.
Other strong preferences include exclusive Vacation Homes at exotic locales with adequate retreat facilities as well as an appreciation potential. States like Goa figure in the top hotspots for vacation homes (35% of holiday homebuyers chose Goa as their preferred destination, as per the ISIR survey). For overseas investments, preference is more towards properties in Dubai and the US.
2. Health and wellness
The most famous investor and one of the richest in the world, Warren Buffett, 93, is known for his remarkable health and work-life balance – something that every ultra-rich person would be keen to emulate. His healthy lifestyle, the practice of “boundaries” and investments in his personal development are globally acknowledged.
Hailing from a country that long professed, “Health is the true wealth” by its ancient heritage, India’s affluent are now actively following this mantra, investing heavily in their health and wellness programs that lead to complete wellness.
In fact, health travel to national and global wellness centers and spiritual retreats has also been on the rise post-pandemic. European destinations like VivaMayr or Himalayan abodes like Ananda, known for their expansive locations and expensive packages, are topping the charts of Indian luxury health travel.
We also see growing trends of corporate heads adopting the mantra to stay fit and healthier and engaging in a series of growing adventure activities like marathons, parasailing, water sports like rafting, summiting peaks, and trekking etc.
On the other hand, global citizens are in need of a comprehensive healthcare plan. Indian insurers now offer health policies that cover medical treatment across borders.
UHNIs/HNIs seek comprehensive healthcare solutions that not only cover hospitalization charges, but also provide access to a network of specialists around the world with personalized health management, expedited appointments and health security during travel.
3. Curated experiences
Who wouldn’t want to experience the quintessential Wimbledon and be seen with some of the global sports and movie icons? From ultra-luxurious holidays, tailored to individual needs to carefully curated special events and limited-access experiences, UHNIs/HNIs are now focusing on distinctive, customized experiences that emphasize enjoyment, uniqueness, and exclusivity. Be it the Olympics or the Football World Cup, with a butler and private chef on standby besides a dedicated concierge to boot, these curated sports packages offer exclusive tickets to event finals, much to the UHNIs/HNIs tastes.
Similarly, planned travel – motivated by high-end gastronomy (planning trips around food experiences), holidays planned around celebrations and special occasions, and adventure travel etc. are some other emerging interests. For example, a trip to the proverbial top of the world, the North Pole on board a state-of-the-art luxury, hybrid-powered icebreaker amid some intrepid explorers is an experience worth betting on.
At Kotak Private too, we also believe in creating excellent experiences for our UHNIs/HNIs clientele and recently hosted a masterclass with celebrity Chef Marco Pierre White across Mumbai, Delhi & Bangalore.
A very different trend also is Space Travel where we saw billionaire Jared Isaacman become the first private non-professional astronaut to take a spacewalk. We have also heard how US-based space expedition companies are set to make their debut in India, opening up opportunities for UHNIs/HNIs in the country to journey into space.
4. Art and Collectibles
According to a French art auction database, Artprice, contemporary art generated over $22.7 billion since 2000 – a mind-boggling 2000 plus percent rise – with the record for the highest paid artwork being $110 million. The recent spurt in the global art market is being driven by the Chinese and select investors from India and other Asian countries amid the ongoing globalization. Many artists who were picked up at meager prices are now commanding millions in value.
In India, investing in masterpieces by renowned artists has always been an avenue for investment for the ultra-rich.
In fact, art was the only constituent of the global Knight Frank Luxury Investment Index (which tracks a weighted basket of 10 collectibles) to hit double-digit growth in 2023.
Furthermore, Delhi is home to a vibrant art scene and has witnessed the setting up of notable art museums by UHNIs/HNIs, such as the Kiran Nadar Museum of Art and Devi Art Museum by Lekha & Anupam Poddar. Additionally, the West also has a burgeoning artistic community with Isha Ambani Piramal’s significant initiative, The Art House at Nita Mukesh Ambani Cultural Centre.
Indian philanthropist, industrialist and art collector, Abhishek Poddar set up the “Museum of Art & Photography” (MAP) in Bengaluru that is devoted to Indian art of all kinds.
Other treasured choices among these investors include rare collectibles like vintage cars, rare wines, and limited-edition watches that are gaining traction as investment assets due to their rarity and potential for appreciation. Watches, a traditional symbol of style and craftsmanship, have been gaining popularity as investments since the last few decades.
Watch brands like Rolex, Audemars Piguet and Patek Philippe are known for their exquisite craftsmanship and limited production and have become symbols of art and engineering masterpieces, appreciating in value.
Indian investors are actively looking for brand reputation, limited editions, rare models, provenance, market trends and demand perceptions. In fact, economic factors, cultural influences, and changes in fashion can also affect the demand. Keeping an eye on market trends and understanding the changing nature of demand for watches can help investors make informed decisions.
5. Private Equity and venture capital
Even as the overall PE VC investments declined on the back of global slowdown, India remains a bright spot in Asia Pacific as per a recent report from Bain & Co. Last year witnessed a remarkable turnaround in the fortunes of start-ups with a lot of family offices, corporate treasuries, UHNIs/HNIs stepping into the funding vacuum, picking up very valuable investments for the future in the process.
The UHNIs/HNIs are investing increasingly in private equity and venture capital with high growth potential. These investments are part of their broader strategy to diversify their portfolios and seek higher returns.
The trend can be gauged from the sheer amount of profit-booking in equities and an increase in allocation towards fixed income, including to private credit funds, which on a risk-reward basis offer much more consistent returns.
Investments in healthcare, consumer, advanced manufacturing and renewables are likely to continue to garner investor attention going forward. UHNIs/HNIs clients and Family Offices are actively participating in opportunities at Pre-IPO stage and companies, which are near to going public.
Away from the mainstream, the Indian NRIs have recently started a trend by investing in sustainable agriculture, starting climate change combating projects and renewable energy ventures. In fact, ESG projects are chosen using broader sustainability goals that act as catalysts for greener economies and equitable societies.
In the words of Antoine Arnault, son of the legendary French businessperson, Bernard Arnault and former CEO of Christian Dior SE, “luxury takes many forms nowadays, but one thing doesn’t change: luxury is about desire and the ability to create dreams.”
India’s thriving UHNIs/HNIs can’t agree more.
(The author is President, Kotak Mahindra Bank Limited)
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)