A majority of wealthy Indians are likely to increase their asset allocation in financial investments, including stocks, mutual funds and alternative investments. However, there will be a decrease in percentage of people deploying money in traditional assets like real estate. According to the tenth edition of Knight Frank’s Wealth Report, released on Wednesday, only 41% and 22% of wealthy Indians plan to invest in commercial and residential property, respectively, in the next 10 years, compared to 47% and 31% wealthy Indians who invested in commercial and residential property, respectively, in the last 10 years.
The interest among India’s rich in residential property in the past decade is much lower than the global average of 54% and Asian average of 52%. The same holds true for the next 10 years as well. But in terms of commercial property, the trend in India matches the direction of the global average.
Others also acknowledge the trend of wealthy Indians moving from physical assets to financial products. For instance, according to the India Wealth Report, released on 23 December 2015 by Karvy Private Wealth, “Alternate assets and mutual funds categories are expected to grow the most—44% and 29%, respectively—in the next five years.”
The shift can be pegged to a large extent to the subdued growth in real estate sector for the past few years. As a consequence, Indian investors are finding other asset classes more attractive. However, it is also to be noted here that the average number of residential properties owned by wealthy Indians is 4, which is higher than the global average of 3.7 and 3.9 in other Asian countries.
