Art, jewellery, cars, stocks, real estate: Where do the ultra-rich invest?

 According to Knight Frank report, art emerged as the top investment avenue

Art emerged as the top investment avenue for ultra-high net worth individuals (UHNWIs) in 2021, followed by jewellery and vintage cars, as individuals steered towards passion-led investments, suggest the findings of the latest Knight Frank Wealth Report 2022. UHNWIs are individuals with a net worth of $30 million and above.

Among asset classes, investment preference in luxury handbags and wines slipped from first to fifth and seventh, respectively, in 2021. According to Knight Frank’s luxury investment index (global), art provided a 13 per cent return in a 12-month period, and 75 per cent over 10 years. 

"11% of the investable wealth of Indian UHNWIs is allocated towards passion-led investments, as against the global average of 16 per cent. About 29 per cent of Indian UHNWIs spent more on passion investments in 2021. Joy of ownership scored above investment returns," the report said.

“Equity markets and digital adoption have been key factors driving the growth of UHNWIs in India. Growth in younger, self-made UHNWIs has been incredible in India.

With healthy growth in the UHNWI, India is expected to be one of the fastest-growing countries among its global peers,” said Shishir Baijal, chairman and managing director, Knight Frank India.

Twenty nine per cent wealth of Indian UHNWIs, according to the Knight Frank report, is allocated towards purchase of principal and back-up homes. Further, 22 per cent of UHNWIs investable wealth was allocated towards direct purchase of commercial property (including rental property, offices etc), while 8 per cent of the investable wealth in 2021 was allocated towards purchase of commercial property, including Real estate investment trust (REITs). According to the report, 8 per cent of the property portfolio was held overseas.

Mumbai – The Maximum City

Meanwhile, the population of these jet-setting ultra-rich continued to grow globally and in India. India was home to 13,637 such ultra-rich (2.23 per cent) in 2021 – up 11 per cent year-on-year (YoY) – of the 2021 global total of 610,569. Of these ultra-rich Indians, nearly 12 per cent reside in Mumbai, the report said.

"The UHNWI population in Mumbai is expected to increase by 29.6 per cent to 2,069 by 2026. In the last 5 years, Mumbai’s ultra-rich population has grown by 42.6 per cent from 1,119 in 2016 to 1,596 in 2021," the Knight Frank report said.

Globally, Monaco continued its reign as the world’s most expensive city in 2021 where $1 million could get you 14.6 square metres of space, followed by Hong Kong (21.3 sq. mt) and London (30.6 sq. mt). Comparatively in Mumbai, one could purchase 108.1 square metres (1,164.02 sq.ft.) of prime residential real estate in 2021, a 2 per cent increase compared to 106 square meters (1,140.9 sq. ft.) in 2020.