The 18th edition of ‘The Wealth Report’ for 2024, published by the global real estate consultancy Knight Frank, provides a detailed overview of wealth creation, investment trends, and the number of ultra-high net worth individuals (UHNIs) and high net worth individuals (HNIs).

The report predicts a 28.1% increase in the number of UHNIs globally by 2028. This growth is expected to be particularly pronounced in Asia, with India and mainland China projected to experience a 50% and 47% rise in their UHNIs populations, respectively. This shift in wealth creation towards Asia is reshaping the global investment landscape, as younger generations with a greater focus on sustainability and social impact increasingly drive investment decisions. 

As the UHNI and high-net-worth individual (HNI) populations expand, especially in Asian countries like India, the demand for alternative investments is expected to rise. Alternative investment options such as Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs) are evolving to meet the sophisticated needs of affluent clients. Financial service providers are crafting customised portfolios to align with the unique risk appetites and financial goals of these investors. This trend is accelerating the growth of PMS offerings and the variety of AIFs available, aligning with the growing needs of high-net-worth investors.

To put this in perspective, the Indian AIF industry, for instance, has reached a historic milestone, with total investment commitments surpassing Rs 11 trillion for the first time in June this year. This remarkable achievement is fuelled by the increasing interest from UHNI and HNI investors. Category I AIFs, which include Infrastructure Funds, SME Funds, and Venture Capital Funds, raised commitments amounting to Rs 80,733 crores. Category II AIFs, encompassing a broad range of investment strategies, secured commitments totalling Rs 9,33,415 crores, while Category III AIFs, which include both open-ended and closed-ended funds, raised commitments of Rs 1.64 lakh crore. These figures reflect the growing demand for alternative investments among affluent investors.

Growth of UHNWIs: Outlook - India & Asia 

The sources predict significant wealth growth in India over the next five years. The Knight Frank Wealth Sizing Model projects a 50% increase in the number of UHNIs in India between 2023 and 2028. This growth is attributed in part to the strong performance of emerging economies in Asia, with India highlighted as a key driver of this trend. 

UHNIs are those individuals with a net worth exceeding $30 million (USD). 

The data underscore the country's dynamic wealth creation and the expanding base of affluent individuals. 

(Note: In the above table, 2028 data is estimated) .

As per the report, this trend of increasing UHNI population is not restricted to India alone, but can be seen across Asia. By 2028, Asia is projected to witness the most substantial growth in the number of UHNIs compared to any other region. 

As shown in the image below, the Chinese mainland is projected to lead the region with an estimated 144,897 UHNIs, representing about 68% portion of Asia's wealthiest individuals. Japan is expected to follow with 24,502 UHNIs, and India is projected to have 19,908 UHNWIs, ranking third. The growth in the Indian economy, coupled with factors such as supply chain diversification and commodity growth are driving economic activities and are expected to aid in wealth creation. 

This distribution highlights the dominant role of these nations in the Asian wealth landscape, with India emerging as a pivotal player in the region's economic dynamics.

How was 2023?

The wealth report highlights a broader global trend of increasing wealth creation, particularly among younger generations, driven by entrepreneurial pursuits and diverse opportunities. This global trend may be mirrored in Asia, contributing to the burgeoning UHNI population. India is set to experience the highest growth in Asia, with a projected increase of 50.1% by 2028, surpassing China's 47%. Countries like Malaysia and Indonesia are also expected to grow significantly, while Singapore continues to attract wealth from its neighbouring nations.

Most countries are taking initiatives to attract wealth which could be a contributing factor for increasing UHNIs in Asia. For instance, competition is fierce between Hong Kong and Singapore to attract Asia's growing wealth. This suggests that successful attraction and management of wealth from within and outside the region could also be contributing to the growth in UHNIs. Both hubs are actively implementing policies to entice family offices and wealthy individuals.

Investment Opportunities in India

India’s growing group of affluent individuals is showing a strong interest in real estate investments as per the Wealth report. Nearly 20% of UHNIs plan to invest in commercial real estate this year, while over 20% are considering residential property acquisitions. This growth trajectory presents significant opportunities for investors, particularly developers who can offer properties that align with the evolving preferences of this newly affluent demographic.

According to SEBI AIF data, the top sectors attracting the most significant investments include Real Estate, IT/ITes, and Financial Services. For instance, a substantial amount of Rs 74,347 crore is invested in real estate as of June 2024, reflecting the sector's strong appeal and potential for high returns. IT/ITes follows with Rs 25,313 crore, driven by the increasing demand for technology and digital transformation. Financial Services, with Rs 24,594 crore invested, underscores the sector's vital role in supporting economic growth and financial stability. The Knight Frank report highlights the active involvement of private capital in real estate investment, underscoring the sector's potential.

Key Takeaway

India continues to be one of the world's fastest-growing economies, bolstered by infrastructure development, capital inflows, and strong demand, enabling investors to create substantial wealth. With the expanding affluent demographic, India is poised to steadily climb the global economic rankings in the coming years. As the population of wealthy individuals grows, the demand for tailored and sophisticated investment solutions will intensify. PMS and AIF products are crucial for UHNIs in their wealth creation journey while delivering curated investment solutions to capitalise on the opportunities.