India's Ultra-Rich Allocate 17% Of Investable Wealth to Luxury Items: Study

The primary motivation cited by Indian UHNWIs for investing in luxury assets is the joy of ownership, according to the survey conducted by the consultant

Ultra-high-net-worth individuals (UHNWIs) in India allocate 17 per cent of their investable wealth toward luxury items, with watches being the most preferred, followed by art and jewellery, according to a report released by the real estate consultant Knight Frank. 'The Wealth Report 2024' emphasises the significant portion of UHNWI wealth devoted to luxury or passion investments.

UHNWI are individuals with a net worth of $ 30 million and above.

The primary motivation cited by Indian UHNWIs for investing in luxury assets is the joy of ownership, according to the survey conducted by the consultant. Among these individuals, luxury watches are the most sought-after investment category, followed by art and jewellery. Classic cars rank fourth in preference, followed by luxury handbags, wine, rare whisky, furniture, coloured diamonds, and coins. However, on a global scale, the super-rich demonstrate a preference for luxury watches and classic cars.

Knight Frank India Chairman and Managing Director Shishir Baijal said in the report, "India's affluent class has long shown a fondness for collectables spanning various categories. With both domestic and global markets offering significantly higher returns for such items, India's ultra-wealthy are actively pursuing investment opportunities in areas aligned with their passions." 

“The demand for rare collectables is on the rise across different age groups in India. As wealth continues to grow in the country, we can anticipate further investments in these asset classes," Baijal added.

In 2023, art emerged as the top-performing luxury asset class, with prices experiencing an 11 per cent increase, according to the annual Knight Frank Luxury Investment Index (KFLII), which monitors the performance of 10 popular passion investments.

"Despite witnessing a depreciation of 9 per cent in the last 12 months, over a longer period of 10 years, rare whisky continued to command its premium value, registering 280 per cent returns," the report said.

Even after significant auction houses experienced record-breaking sales in the luxury investment market, the KFLII dipped slightly into negative territory for the second time, decreasing by 1 per cent in 2023. This decline occurred as several components of the index either fell into negative territory or showed minimal gains.