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The economic downturn may have slowed the ultra-rich but not stopped them from splurging on luxury goods.
According to a new report, ‘Top of the Pyramid – 2013’ jointly published by Kotak Wealth Management and Crisil Research, last year most ultra-HNIs — having a minimum net worth of Rs 25 crore over 10 years — saw the slowdown as a temporary phase and did not rein in their spending. This year, however, there seems to be some pessimism that has made them cautious in spending.
As a result, most ultra-HNIs are taking their time to evaluate high-value purchases such as luxury cars and home theatres. But on apparel, luxury watches or high-end electronics, there is no stopping them.
To sustain their high-end lifestyle, the survey said, ultra-HNIs continued to spend significantly on branded wear, customised holidays, luxury watches, jewellery and diamonds/precious stones, or home electronics. And despite the staggering rise in gold prices during the year, the yellow metal continues to be bought, especially in jewellery form. The extravagance extends also to real estate choices. The growth in luxury home sales is a clear indicator of the top-of-the-shelf wealth creation happening in the country. Also, luxury home purchases are not confined to India as an increasing number of ultra-HNIs are buying property in Singapore, London and Dubai.
7 more billionaires
Besides this, ultra-HNIs are increasingly capitalising on opportunities such as real estate distress sales to make a quick killing.
Not just the spending but also the number of spenders is going up, according to the survey. The number of billionaires in the country went up by seven, from 48 in 2012 to 55 in 2013.
According to the report, the number of “ultra-high net worth households” is set to triple to 3,29,000 within the next five years. The total net worth of these ultra-HNI households is estimated to grow from Rs 86 lakh crore in 2012-13 to Rs 380 lakh crore in 2017-18.
On a pessimistic note, the report warns of the possibility of India’s ultra-HNI population shrinking. With the super-wealthy in the cross-hairs of policymakers, now even contemplating a higher wealth tax, it is possible that some ultra-HNIs will relocate to countries that will treat them more favourably.
> arvind.jayaram@thehindu.co.in
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