32% of Indian millionaire wealth is allocated towards residential assets

Thirty two per cent of India’s ultra-high-net-worth individuals (UHNWIs),  those with a net worth of $30 million and above) wealth is allocated towards the residential real estate asset class, according to the 2024 'Wealth Report' released by Knight Frank India, a real estate consultancy firm.

 Nearly 14 per cent of their residential portfolio is allocated outside India.  About 12% of India’s UHNWIs plan to buy a new home in 2024. A similar percentage of wealthy individuals in India purchased a new home in 2023. Globally, 22% of the ultra-wealthy are expected to purchase a home in 2024. The report further highlighted that on average an Indian UHNWI owns 2.57 homes while a sizable 28 per cent have rented out their second homes during 2023.

 

" Globally, almost a fifth (19 per cent ) of UHNWIs plan to invest in commercial real estate this year, while more than a fifth (22%) are planning to buy residential. Growth over the forecast period provides various opportunities for investors, particularly developers able to deliver a property that suits the shifting tastes of the newly minted," said Liam Bailey, global head of research, Knight Frank.

% UHNWIs buying houses 

In the recently conducted attitude survey, gauging the perspectives of UHNWIs in India, 23 per cent  prefer investing in the most sustainable assets when it comes to commercial properties within the realm of ESG strategies. This sentiment was mirrored on a global scale, where 29 per cent of UHNWIs expressed a similar inclination towards investing in the most sustainable and prime assets, attributing a lower risk profile to this strategy compared to others.

Among the noteworthy ESG strategies mentioned by affluent individuals in India, investment in renewable energy projects and exploring carbon sequestration opportunities through land acquisition were also identified as key priorities.

 “The prime residential assets continue to be the mainstream investment avenue for ultra-wealthy individuals in the country. Indian ultra wealthy are gravitating towards ESG oriented strategies for investments in commercial real estate. Sustainable real estate assets will further gain prominence amongst family offices and wealthy individuals in 2024," said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

How much space can $1 million buy you in Mumbai and Delhi?

 Monaco continues its reign as the world’s most expensive city where $1 million can get you 16 sq. mt. of space, followed by Hong Kong (22 sq. mt.) and Singapore (32 sq. mt.) in 2023. Comparatively in Mumbai, one can purchase 103 sq. mt. of prime residential real estate, marking a decline of 9 per cent in space year-on-year. In Delhi and Bengaluru one can purchase 217 sq. mt. and 377 sq. mt. of prime residential real estate, respectively. 

Area (in square meters) purchasable for US$1 million over the last 5 years for Mumbai, Delhi and Bengaluru:

All the three Indian cities (Mumbai, Bengaluru, and Delhi) have recorded a reduction in space purchase for US$ 1 million

Mumbai is now ranked as the eighth most expensive luxury real estate market in the world in terms of price growth, while Delhi is at the 37th spot and Bengaluru at 59th
 

The value of Prime International Residential Index (PIRI 100) has increased by 3.1% in 2023 showcasing solid overall gains. Of the 100 luxury residential markets tracked, 80 recorded positive to neutral annual price growth. Manila (26%) leads the rankings while Dubai (16%), last year’s frontrunner slipped one spot. The Bahamas (15%) comes in third place with Algarve and Cape Town (both 12.3%) completing the top five. 

Asia-Pacific (3.8%) pipped the Americas (3.6%) to the title of the strongest-performing world region, with Europe, the Middle East and Africa trailing (2.6%). Sun locations continue to outperform city and ski markets, up 4.7% on average. Ski resorts are close behind (3.3%) and prime prices in the city market tracked have risen 2.7% on average. 

Mumbai ranked 8th on Knight Frank’s PIRI’s index in 2023 as compared 37th rank in 2022 which is a phenomenal jump of 10% year on year growth in terms of annual luxury residential price rise. This jump has marked a place for Mumbai in the top 10 leading luxury residential markets. Delhi ranked 37th and showcased rise of 4.2% YoY in 2023 as compared to  rank in 2022. Bengaluru stands at 59th rank compared to 63rd in 2022 recording a 2.2% YoY increase in 2023. 

The PIRI 100: Luxury residential markets’ performance, annual price change (2022 - 2023)