StatsGuru: 16-July-2012

Recent studies that luxury goods’ sales are holding up well even as growth is faltering have refocused attention on the numbers of India’s wealthiest. Who is buying, for example, luxury cars such as BMWs, Mercedes-Benzes and Audis, which together sold 3,300 units last quarter? According to Table 1, the number of households in India with a net worth of Rs 25 crore is exploding. There were 81,000 such households in 2011-12; Kotak Wealth and CRISIL Research predict that there will be 286,000 such households in five years.

And what are the wealthy doing with their money? Table 2 explains. Aside from expenses, the bulk – around half – is reinvested either in their primary business or in wealth management. Interestingly, as the economy slows down, they have increased the proportion of income they spend on “expenses” by more than 25 per cent.

That relative rise in spending is what, presumably, is buying all those limousines. The luxury market appears recession-proof, having risen steadily in dollar values; and, as Table 3 illustrates, it is expected to continue growing. What, precisely, is the luxury market? The same table also breaks up this spending. Notably, the biggest chunk of spending is on jewellery, enhanced by high gold prices.(Click here for tables)

Yet, while all sections of the super-rich are doing well, some might be doing better. One of the most revealing ways in which they spend their money is on their enclaves in South Delhi and downtown Mumbai.

As Table 4 shows, while high-end rentals have decreased slightly from earlier stratospheric levels in Mumbai, in Delhi they have continued to increase during the slowdown. This is even more marked in real-estate purchase prices, as shown in Table 5. While Mumbai has held its level, decreasing only by a tiny proportion. Delhi realty prices have spiked by 70 per cent over two years.