H
ello, I'm Amala Balakrishner, reporting from Singapore. This week, we're looking at how India's wealthy elite are anchoring their fortunes in real estate.
India's high-net-worth individuals may be emigrating, but they're keeping a firm grip on their domestic and international property investments, fueling a luxury market boom. According to Dhruba Jyoti Sengupta of Wrise Wealth Management Middle East, many of these wealthy Indians remain bullish on India, allocating around 80% of their investments domestically, with a significant portion going into real estate.
Traditionally, owning a property has been a cornerstone of wealth strategy for Indians. It serves as both a financial asset and lifestyle statement. The country's ultra-high-net-worth individuals hold $11.6 trillion or 59.1% of all assets held by Indian households, with $7.1 trillion parked in real estate and gold.
Real Estate Investment Trusts (REITs) are becoming increasingly popular due to their ability to generate predictable yields without the operational burden of direct property ownership. Residential and commercial properties are also in high demand, with housing prices in India rising 7.7% in the first quarter of this year.
The rich typically own single-family homes or self-contained residential buildings in major metropolises like Delhi, Mumbai, or Bengaluru. They also invest in "palatial" country homes outside the city, often held for five to ten years due to favorable tax rules.
For property investments abroad, India's wealthy consider functionality and long-term returns. Dubai is a popular location given its strong rental yield of 6% to 7%, while other destinations include Ras Al-Khaimah in the UAE, Thailand's Phuket and Koh Samui, and London.
Beyond real estate, India's wealthy are also investing in other assets, including capital markets, private equity, venture capital, and hedge funds. Cryptocurrency is also finding a place in portfolios, albeit at a small percentage of around 2%. The analysts I spoke to said that India's wealthy are now looking beyond physical assets to tap into global growth opportunities.
In the markets, Indian inflation slowed to its lowest since 2017, with the consumer price index for July coming in at 1.55%. Indian IT companies have been trimming roles, and investors may want to steer clear of those companies' stocks. India and China are restarting flights after a two-year suspension due to the Covid-19 pandemic and border dispute.
Indian markets were muted on Thursday, with both the benchmark Nifty 50 and BSE Sensex index closing flat. The benchmark 10-year Indian government bond yield had fallen to trade at 6.4045%.
