Indian HNI club swells 20% to 1 lakh in 2006

The number of High Net worth Individuals (HNIs) in India grew by 20 per cent to 100,000 in 2006. Of the 100,000 HNIs in India, an estimated 858 are Ultra-HNIs with more than $30 million in financial assets.

India has the second fastest growing population of HNIs in the Asia-Pacific region, according to the second Asia-Pacific Wealth Report published by Merrill Lynch and Capgemini. HNIs are people with net financial assets of at least $1 million, excluding their primary residence and consumables.

There were 2.6 million HNIs in Asia Pacific at the end of 2006, which is an increase of 8.6 per cent from a year earlier, and they account for almost 94 per cent of the region's HNIs. Asia-Pacific is home to 27.1 per cent of the world's high net worth population.

China and India drove the region with 10.5 per cent and 8.8 per cent real GDP growth, respectively. Additionally, savings rates, as a percentage of GDP, were higher in Asia-Pacific than in most developed markets.

Indian HNIs held a combined $350 billion in financial assets at the end of 2006, representing 4 per cent of total Asia Pacific HNI wealth. A demographic analysis also reveals that the majority of India's HNIs are between the ages of 41 and 55 years, said the report.

The growth was driven by economic expansion as India experienced real GDP growth of 8.8 per cent in 2006 as well as robust stock market performance.

"Robust economic growth and strong financial markets, along with gains in income and credit expansion which drove private consumption, were the key drivers of growth in India's HNI population," said Pradeep Dokania, head of global private client at DSP Merrill Lynch.

Non-traditional investment products are gaining in popularity as Asian investors seek better domestic returns and foreign institutions seek involvement in the high-growth region.

For example, real estate investment in Asia-Pacific has grown due to the strong performance of commercial property and REITs (real estate investment trusts). Indian HNIs prefer investing in real estate and equities.