Ultra-rich households set to treble in five years

India has 62,000 ultra high net worth households, with an average net worth of Rs 75 crore. In five years, the number of such households would more than treble to 219,000, each with a net worth of about Rs 100 crore.

According to a study by Kotak Wealth and Crisil Research released on Tuesday, the fast growth in their ranks notwithstanding, the number of ultra wealthy households remains a mere 0.03 per cent of the total households in the country. The report defined ultra high net worth households as those with a minimum net worth of Rs 25 crore.

Titled 'Top of the Pyramid’, the study was the first of its kind, since other research reports focus only on high net worth individuals. A recent Merrill Lynch Capgemini Wealth management report estimated the number of people with a net worth of Rs 4.5 crore at 126,700.

The report said the five-fold rise in net worth and the increasing propensity to spend would have a deep impact on the luxury goods market. The potential market size of the luxury jewellery segment is Rs 22,900 crore, while the market for the luxury car segment is pegged at Rs 14,000-15,000 crore. The full realisation of this potential would only be possible once luxury brands develop greater points of access, offer a wider range and customisation of products to suit the preferences of the Indian customer, said Roopa Kudva, managing director, Crisil.

The study identifies three distinct profiles of ultra high net worth individuals (UHNIs) in India – the inheritor, the self-made and the professional. UHNIs display greater risk aversion in personal investments. While real estate has been the most preferred avenue, alternate asset classes are also likely to gain popularity, the report said.

Kotak Mahindra Bank Executive Director C Jayaram said in a bid to diversify their portfolio, largely comprising traditional assets like realty and equity, UHNIs have started investing in emerging, alternate assets like private equity, hedge funds, structured products and derivatives.

What sets ultra high net worth individuals apart from other classes of individuals in the country is the sheer value and size of the assets they own. The dramatic increase in personal wealth has brought about a change in the attitudes towards spending. The public displays of opulence, which would have been unthinkable a few years ago, are not uncommon now, the report said.