High Net worth Individuals pessimistic on early recovery of economy
As per a recent study conducted, High net worth Households (HNHs) within India have become cautious while making discretionary purchases, as they do not expect the economic scenario to improve soon. An ultra HNH has been defined by the study as one with a minimum average net worth of Rs 250 million accumulated over the last ten years.
The study suggests that unlike last year, an huge proportion of percentage of respondents believe that an imminent downturn is bound to occur and an early recovery isn’t in sight, indicating a level of pessimism concerning the economy that wasn’t felt last year. This has effected a modification within the ultra high net worth individuals (HNIs) perception on investing; nearly a third the respondents indicated that their investments have been adversely impacted.
As per the study, the ultra HNIs continue to lavishly spend on food, luxury homes, clothing, travel, and education along with family vacations. According to internationally renowned real estate experts, while overall, non-discretionary spends are continuously on the rise, caution has crept into discretionary purchases and these variations in the spending behavior are a grave cause of concern.
Realty experts also believe that in comparison with the last fiscal, more pessimism is being generated regarding an early economic recovery among the ultra HNIs this fiscal. The caution that appears to be creeping into ultra HNI spending, specifically in their discretionary spends should be an added concern. In terms of investment strategy, the focus was on capital protection and disciplined investment, with asset classes such as real estate and debt.
Traditionally in India, real estate investments are viewed as medium risk. However, the radical HNIs have been progressively capitalizing on opportunities like distress sales, etc., as part of their short-term investment plans. In this sense, trends this year weren’t too dissimilar compared to last year.
The study additionally estimates that the number of ultra Indian HNHs have grown to roughly 1,00,900 within the current fiscal. These figures are further expected to be tripled and reach approximately 3,29,000 over the period of the next five years.
Consequently, the ultra HNHs net-worth is calculated to surge more than four folds from an approximate figure of Rs 86 trillion in 2013 to Rs 380 trillion by 2018. Interestingly, almost 46 per cent of this demography reside within non-metros.
