Bengaluru to witness fastest growth of UHNWIs population globally by 2023
India’s financial capital Mumbai is the 16th most expensive prime residential property market in the world. Globally, Philippines’ capital city of Manila led the Knight Frank Prime International Residential Index (PIRI 100) after luxury home prices jumped 11 percent last year, bolstered by a lack of supply and a thriving domestic economy.
Mumbai (67 PIRI rank), which has the most expensive real estate in India, saw a marginal rise in prime real estate costs at 0.3 percent while Delhi recorded a rise of 1.4 percent putting it ahead of Mumbai at 55th rank on the survey. Bengaluru recorded a rise of 1.1 percent rise in prime residential real estate in 2018 over the previous year.
“Mumbai while being India’s most expensive prime real estate market, still stacks well against many other markets. Mumbai will buy ten times the space as in Monaco and over three times more space as in London and New York. While Dubai allows you to about 50 percent more space as in Mumbai.” Shishir Baijal, Chairman and Managing Director, Knight Frank India adding prices have corrected marginally over the last one year enabling comparably higher space in the city.
In the latest issue of The Wealth Report, launched on Wednesday, Hong Kong and Singapore took two of the top five spots in a global ranking of cities that consider wealth, investment and lifestyle. Hong Kong ranked third and Singapore fourth in Knight Frank’s City Wealth Index 2019, a list that investors rely on to identify global urban powerhouses. Mumbai ranked 12th in terms of wealth on the index bettering its previous position of 18th in 2017 while Bengaluru was placed 60th in terms of investments superseding Mumbai and Delhi.
Other Asia-Pacific countries ranked in the top 10 include Shanghai, Sydney and Tokyo. Despite Brexit concerns, London took the number one spot overall, reclaiming the spot from New York, which dominated last year’s standings.
The City Wealth Index also highlighted cities of the future that are projected to attract investors in the coming years. These are Bengaluru, Hangzhou, Stockholm, Cambridge and Boston. Factors that drive the selection include innovation indicators, wealth forecasts, economic growth, and aspects that improve a city’s growth prospects, such as infrastructure. Cities that demonstrate these characteristics are likely targets for future property investment.
“India’s economic growth and economic stability are reflected in the way our cities, especially Mumbai and Bengaluru have ranked on the city wealth index survey. With an average growth of over 7 percent in GDP, we expect wealth creation to be equally robust in coming years. Our survey already indicates an expected growth of 39 percent in UHNWIs which is indicative of the fact that these cities will also accumulate a greater amount of wealth over the next few years,” says Baijal.
The report also says Bengaluru will lead the UHNWIs growth forecast at 40 percent, while Mumbai and Delhi are likely to see 38 percent growth, respectively in the next five years forecast. Bengaluru is the first amongst the top 5 ‘cities of the future’ along with Hangzhou, Stockholm, Cambridge and Boston.
According to the Attitudes Survey launched today within the Knight Frank Wealth Report, for the year 2018, Indian respondents gave a thumbs up to equities (30 percent) and bonds (28 percent) where respondents to the survey said their clients preferred these high return investment assets. Real Estate with 23 percent was the third most invested asset class by Indian UHNWIs. Interestingly, liquidity was not the preferred asset which made up only 9 percent of the total investments of Indian ultrarich.
In the Indian market, there is a strong bend towards Equities (34 percent) and Private Equities (37 percent). Private Equity which saw only about 4 percent of wealth allocation in 2018 is set to see a significant rise in 2019. Bucking the global trend, Indian UHNWI showed the least preference for the most liquid of all assets, i.e. cash, which registered a negative sentiment of -15 percent. A strong trend was also witnessed in bonds investment for which sentiments saw a rise of 20 percent.
“While globally UHNWIs are showing an affinity towards more liquid investments as it is the most risk-averse asset, Indian counterparts on the other hand,. are increasing their exposure in equity and bonds. There is a sense of confidence amongst Indian UHNWIs on the strength of the countries economic growth which is pushing them to invest in higher-risk assets for shorter periods of time. Real Estate (0 percent) and Luxury Investments (5 percent), which are the most illiquid asset amongst remain largely stable,” says Baijal.
In India, where the volume of wealth is rising the fastest globally, UHNWIs in the country are expected to decrease cash exposure and increase their allocation to private equity in 2019 as local investors grow in sophistication.
Indians prefer the UK and the US to buy properties outside of India, said the Knight Frank’s Wealth Report Survey.
Australia is the destination of choice for Asian ultra high networth individuals (UHNWIs) who plan to buy a new home overseas or invest in property in the coming year, based on a Knight Frank survey of 600 private bankers and wealth advisers who between them manage over US$3 trillion of wealth for UHNWI.
For Indian UHNWIs, United Kingdom (UK) with 74 percent preferring to purchase in that country while 39 percent responded favourably to the US. Both these places are of high interest for the India ultrarich from business as well as leisure and lifestyle purposes. These also remain the top choices of investment or self -use purchase for the coming years.
According to the Attitudes Survey in Knight Frank’s Wealth Report, 25 percent of Asian UHNWIs, plan to buy a home outside their country of residence by 2020, higher than the global average of 22 percent. 18 percent Indian UHNWIs showed an affinity towards purchasing homes outside of their domicile country.
Of those, 45 percent indicated they would buy in Australia, 33 percent say UK and 32 percent chose Canada. These buyers are mostly from China, Hong Kong, Malaysia and South Korea, with one in three indicating their interest to buy a residential property overseas this year or next.
Knight Frank has launched the 13th edition of The Wealth Report 2019, that provides global perspectives on prime property and wealth. The annual publication includes the Knight Frank City Wealth Index; price movements across 100 luxury residential property markets; the results of Knight Frank’s Luxury Investment Index; and, the Attitudes Survey.The report identifies top cities across the world that will support wealth creation including innovation indicators, wealth forecasts and economic growth and those aspects that improve a city’s growth prospects, such as infrastructure. Termed ‘Future Cities’ of the world, these cities demonstrate characteristics that will propel wealth creation as well as future property investment. Leading this table is the city of Bengaluru, which is expected to see a UHWNIs growth of 40 percent in the next five years.