Knight Frank has released its wealth report for 2024 which says that the india’s ultra high net individuals will double in next 5 years. We spoke to Gulam Zia on the Knight Frank Wealth Report 2024... Here's a slice of the conversation
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00:00 Hello and welcome. We are in exclusive conversation with Gulam Zia of Night Frank on a report
00:05 that has been published by Night Frank, which is entitled as India's Ultra Wealthy Population
00:11 is Projected to Increase from 13,263 to 19,908 in the Next 5 Years. This is the Night Frank
00:20 Wealth Report 2024.
00:21 Mr. Zia, thank you very much for joining in. Mr. Zia, when on the face of it, that number
00:26 doesn't look very large and hence I am very intrigued to know how do you define Ultra
00:31 HNIs?
00:32 Well, we define the UHNIs as someone who has a wealth of 30 million US dollar including
00:43 the primary home that they stay in. So that's something which is a global definition and
00:48 when we are keeping this number at par all over the world, these are the numbers that
00:52 we are focusing on and our survey actually then goes into in-depth of where are they
00:57 spending, how are they growing in that number, etc. So that's exactly how the definition
01:02 of UHNIs for us is.
01:04 Right. So Mr. Zia, 30 million dollars including your primary home and this also includes not
01:10 just financial assets, I am assuming it's assets across the board, right? So real estate,
01:15 art, however you would like to define the net worth.
01:18 Yes, it includes even investment of passion which as you rightly mentioned, it goes into
01:23 art, it goes into even vines, it goes into luxury cars and so on and so forth. So anything
01:31 which qualifies as investment of passion is also included over and above your real estate
01:38 or the typical investments in various financial instruments, etc. All that and over and above
01:46 that is the investment of passion also included in it.
01:49 Mr. Zia, where is that money coming from? So where are these Ultra HNIs, are they largely
01:55 from tier one cities and you are also expecting a pretty big growth in this segment. Where
02:01 is that growth going to come from? Let's start by geography, then we will talk about
02:04 of course professions and where that money is really getting spent.
02:08 Well, to start with, the old wealth has been largely in the top two cities which is Mumbai
02:15 and Delhi. But in last couple of years, about 7-8 years, 9 years, a huge number of tech
02:23 investors have also come into UHNI bracket which means even Bangalore, Hyderabad, Chennai,
02:30 Pune, a lot of these cities have also added to the numbers of UHNIs in India. So overall,
02:37 as I said, it's a mix of old wealth as well as the new tech-backed wealth which has been
02:42 generated in a few years. But that said, still, the largest numbers are still focused or coming
02:49 from Mumbai and Delhi.
02:50 Mr. Zia, where are these Mumbaiites and Delhiites spending this money is what I want to know.
02:55 Are they buying more homes, are they buying bigger homes? Let's start with real estate
02:58 because that is largely consumable asset class.
03:02 Indeed, you are absolutely right. And the way we are doing our survey, we are finding
03:08 out that the ownership of homes is also increasing. Almost about two and a half is the number
03:16 of homes that these UHNIs have. That means minimum two to three homes each of them have.
03:21 Well, many of them do rent out that additional home. But then they are also looking at buying
03:27 more homes in times to come. And perhaps that's one of the reasons why in recent past when
03:33 you're talking about the super luxury homes selling like hotcakes, especially in Mumbai
03:39 and now even in Delhi, even in Delhi today, homes are selling at 95 to 100 crore a piece,
03:47 which means that the super luxury homes are actually selling like hotcakes, as I said,
03:51 most both in Mumbai as well as Delhi.
03:53 And this is the average price tag of the homes ultra-HNIs are buying. And is this their first
03:58 home, or they're also willing to shell out serious money for their second homes? Because
04:02 9,500 crores and $30 million is about 240 crores, right? So willing to spend 50 percent
04:07 of their wealth on first homes?
04:09 Well, what I spoke about are a few instances. And of course this is not the whole world.
04:16 Many of them are actually buying abroad. And these houses abroad are multiple of the numbers
04:20 that we are talking about. So if you're buying something in Manipur or in Delhi, in London,
04:24 in Mumbai, etc., the numbers are going to be skyrocketing. What I was talking about
04:29 is investment within India, and those are the numbers looking at. And in recent past
04:33 we have also seen people buying homes, especially in Mumbai, for about 250 to 300 crore a piece
04:39 as well. So this number is huge. But the point remains that the real estate remains one of
04:46 their favored asset to invest in.
04:48 Right. And what about disposable income, which is still being generated in terms of cash
04:54 flow every month? So beyond purchasing your first and second home, where else do you expect
05:00 this money to go into? Is it going to be invested into equities, or is it going to be lifestyle
05:04 choices some of these ultra-H&Is are making?
05:08 Of course, the first choice is equities or the related instruments, which is the financial
05:14 instruments to start with. The investment of passion that we're talking about, the watches
05:19 or the cars, etc., are also there. But that is the choice which is, of course, after you
05:25 have taken your real estate, then you are investing in it. And hence, of them, the biggest
05:31 choices or the topmost choices are art, luxury watches, and cars.
05:37 And I want to talk about beyond luxury watches, cars, I also believe shoes is one thing. And
05:44 we've seen how difficult it is to get into the watches and wonders event that happened
05:47 in Switzerland. But talking about out of this country, are ultra-H&Is also picking up homes
05:54 outside India? So is Paris, Greece, Italy, are these places, Monaco, are ultra-H&Is still
06:01 headed there? And not just Indians, really. Global ultra-H&Is. Where is the melting pot?
06:05 Well, in terms of price points, Monaco remains the costliest in the world. And well, it's
06:13 not just about Indians, since you spoke about. But if you talk about Indians per se, the
06:19 biggest numbers are drawn towards Dubai. And of course, London has always been a preferred
06:24 choice. A few of them in Singapore or Australia, not so many in America, though. But then the
06:31 top choices, once again, if you have the biggest money, the highest money to spend, Monaco
06:36 remains the biggest choice, the first choice for all of them.
06:39 And Dubai also, you said, I believe the maximum number of $10 million homes in Dubai were
06:44 bought by Indians. Now that is huge. I think the Golden Visa has changed the game for how
06:49 Indians treat Dubai. And Dubai is now popularly known as another state in India, right? Do
06:55 you expect that market to continue to grow very strongly, especially for the Asian ultra-H&Is?
07:00 Indians, Pakistanis, Arabs, the whole host, really.
07:05 Well, Dubai is not just about visa. Dubai is a lot more than just visa. It's the freedom
07:11 to do what you wish to do, from your culture perspective, from your ethnicity perspective.
07:19 Happiness index. In fact, they have a separate ministry for happiness. And a lot of these
07:24 things that they have done in recent past has actually given them much of an edge over
07:28 the rest of the world. And of course, it remains the most central destination around the world,
07:33 geographically very, very advantaged. And the biggest point, as you rightly say, the
07:38 proximity from India is the best. Like, at least if I'm talking about Mumbai perspective,
07:43 the time taken to reach Delhi and Dubai is the same. So a lot of these reasons that are
07:48 drawing individuals to buy in Dubai over and above the Golden Visa we spoke about. So multiple
07:55 reasons to be in Dubai today.
07:57 Right. Suzya, of course, it'd be interesting to also know how to make that money, right?
08:03 Now, if you have to qualify and see that growth, are these new businesses that are leading
08:08 to this serious amount of wealth being created, is it financial assets that have gotten or
08:12 helped these families get richer or add more families in that ultra-H&I basket? Or is it
08:19 new technology? Everyone's talking about AI. Is that what could lead to this big spurt
08:23 of richness, if I may call it, in countries like India?
08:27 Well, first of all, the growth rate of new H&Is in India is the highest. We have added
08:35 about 50% new H&Is over and above what it was in the previous year. So the growth is
08:42 the highest in India. The rest of the world, we are still watching at about 28% growth
08:47 in new H&I numbers. But in India, we are far greater numbers as far as the increment in
08:53 the H&I is concerned. And the direct credit obviously goes to the way the economy has
08:58 been performing. Last year, the best-performing economies had about 7% growth in the economy,
09:05 etc. These are numbers which are very clearly evident that if that is what it is, then Indian
09:11 H&Is will be growing in number that fast. And that is reflecting not just in technology,
09:16 of course, we spoke about tech earlier. In tech, of course, AI and a lot of those things
09:21 will come about. However, in the last year or so, the old type of technology, if you
09:27 talk about IT, ITS, etc., BPOs, etc., have been shrinking in numbers a lot. So the CXOs
09:34 who are actually on the top of those companies may not really be in an advantageous position.
09:39 But then because of the overall growth, I would also focus on manufacturing, the infrastructure,
09:45 the ports, a lot of those sectors that are booming in India. Of course, the China Plus
09:50 One remains one of the biggest reasons for the manufacturing growth in India. Warehousing,
09:55 logistics, you name it, everything is booming. So overall, that's the direct impact the number
10:01 of UHNIs increasing has from the economy itself.
10:05 Sharma: Mr. Zia, I'm just pulling out a point from your report where you've said that despite
10:14 record-breaking individual sales in 2023, a surge in the financial markets has actually
10:18 contributed to a shift in allocations impacting luxury asset value. And I believe the index
10:23 has fallen 1 percent, pulled down by falling values of whiskey, classic cars, handbags,
10:29 furniture, art, jewellery and watches. So while art, jewellery and watches continue
10:34 to score quite well, cars and handbags have fallen off or reduced. What is leading to
10:39 that? I mean, I still think the Birkin is aspirational and I know that the queues all
10:45 over the world are still pretty long at Hermes.
10:47 Well, the direct, would I say if I have to give reasons, it directly connects to their,
10:53 you know, the wish to invest or buy any of these products. So if there is a reduction
10:59 in value of the prices of these two items, the handbags and cars, it's directly connected
11:05 to their aspirations to buy. So which is clearly visible, investment in real estate is going
11:12 up, but investment in these two assets is not really keeping up. And that's what is
11:17 explaining that if the demand is not as good, obviously the prices will not grow as much.
11:22 That's interesting. So it's not the lack of supply that has reduced, impacted the amount
11:28 of bags or cars or whisky being purchased. It's actually the lack of demand which could
11:34 keep prices cap. But Suzy, I'd love to chat with you longer. This is such an exciting
11:38 report. Maybe we'll connect once again, do a longer conversation and dwell more into
11:42 this.
11:42 [inaudible].
11:46 you