Luxury investments rising in India’s booming economy

India’s booming economy has fuelled a surge in investments in expensive watches, art and other luxury collectibles among the country’s super-rich.

Opulent symbols of wealth such as Rolex watches and MF Husain artworks offer the ultra-rich not only status but also potentially lucrative returns.

For India’s 1%, who account for 40% of the country’s wealth, rare timepieces and exquisite artworks offer ways to diversify their portfolios.

According to 'The Wealth Report 2024' by Knight Frank, nearly 17% of India’s superrich (those with a net worth of $30 million and above) bought coveted collectibles using their investable wealth in 2023.

But Indians still love real estate. According to the report, 32% of super-rich Indians invested in property last year.

The report said expensive watches were the top luxury investment category for super-rich Indians in 2023, followed by art.

Jewellery also featured on the list. This contrasted with global preferences, where art reigned supreme, followed by watches and classic cars. India’s super-rich also invested in wine and rare whisky, but relatively less than than their global counterparts. The report did not consider real estate to be a luxury investment.

Shishir Baijal, chairman and managing director of Knight Frank India, said Indians have a long-standing appreciation for collectibles of various kinds, and that this was driving the growth.

There are also promising returns to be had in these categories in both domestic and international markets, the report found.

“The demand for rare collectibles is rising across age groups in India, and as wealth continues to grow, we expect further investments in these asset classes,” it said.

The number of ultra-highnet-worth individuals (UHNWIs) in India grew by 6.1% in 2023, and their number is projected to grow by 50% – from 13,263 to 19,908 – in the next five years, far outpacing the global average.

The number of wealthy individuals globally is expected to grow by 28.1% to 8.02 lakh by 2028. In 2023, their number rose to 4.2%, 6.26 lakh from 6.01 lakh the previous year. About 90% of Indian UHNWIs expect their wealth to increase this year, and almost 63% of these expect it to grow by more than 10%. The report added that 32% of India’s UHNWIs have invested in real estate. Interestingly, nearly 14% of their combined residential portfolio comprises properties located outside India.

About 12% of India’s UHNWIs bought a new home in 2023 and a similar percentage plan to do so in 2024, the report said. This is lower than the global average of 22%. The average Indian UHNWI owns 2.57 homes and a sizable 28% rented out their second homes during 2023.

According to Knight Frank’s Luxury Investment Index, which tracks 10 popular luxury investments, art was the bestperforming asset in 2023, with an 11% price increase. Other luxury assets such as rare whisky still hold long-term value, having generated 280% returns over the past decade, it said. The report added that while auction houses saw recordbreaking sales in 2023, the luxury investment index dipped slightly at the end of the year as the value of some assets fell or saw minimal gains. However, experts said this could have been a market correction rather than a cause for major concern, with some losses simply reflecting a stabilisation of previously inflated assets.

The number of ultra-high-networth individuals in India grew by 6.1% in 2023, and it’s projected to grow by 50%