New Delhi: It is a common perception that rich people invest their money in property, gold, and shares. While these are popular choices, they are not the only ones. A new report by Knight Frank India has revealed that the country’s wealthy people allocate 17 percent of their investable assets to luxury items. This means that they spend a significant amount of money on buying and collecting expensive items that may not have any practical use but are valued for their rarity, beauty, or craftsmanship.
The report, titled ‘The Wealth Report-2024‘, was released on Wednesday and surveyed 600 wealth advisors and private bankers across the world, representing over 50,000 ultra-high-net-worth individuals (UHNWIs) with a combined wealth of over $3.3 trillion. The report also analyzed the spending patterns and preferences of India’s rich, who are expected to grow by 63 percent in the next five years, reaching 11,198 by 2029.
According to the report, luxury watches are the most preferred investment option among rich Indians, followed by artifacts and jewelry. These items are not only seen as status symbols but also as potential sources of income, as they can appreciate in value over time. For instance, a Patek Philippe watch that was bought for $200,000 in 2008 was sold for $3.6 million in 2019, a staggering 1,700 percent increase.
Other luxury items that attract the attention of India’s affluent class are classic cars, luxury handbags, wine, rare whiskey, furniture, colored diamonds, and coins. These items are often collected for their personal or sentimental value, as well as their historical or cultural significance. For example, a 1962 Ferrari 250 GTO that was once owned by a Formula One driver was sold for $48.4 million in 2018, making it the most expensive car ever sold at an auction.
The report also revealed that the choice of the ultra-rich globally is similar to that of India’s rich, with luxury watches and classic cars topping the list. However, there are some regional variations, such as Chinese UHNWIs preferring wine and rare whiskey, while Americans favor jewelry and colored diamonds.
Shishir Baijal, Chairman and Managing Director, of Knight Frank India, said in the report, “India’s affluent class has long shown interest in collectibles across various categories. Both domestic and global markets offer quite high returns for such items. India’s ultra-wealthy class is actively paying attention to it.” He added that the demand for rare collectibles is increasing across different age groups in India, as wealth continues to grow in the country. He said, “…as wealth continues to grow in the country, we can expect more investment in these asset classes.”
The report also highlighted some of the emerging trends and challenges in the luxury market, such as the impact of the Covid-19 pandemic, the rise of digital platforms, the importance of sustainability, and the need for authentication and provenance. The report suggested that the rich are becoming more conscious of the social and environmental implications of their spending, and are looking for ways to invest in items that are ethical, eco-friendly, and transparent. The report also noted that the rich are increasingly using online platforms to buy and sell luxury items, as well as to access information and expertise. However, the report also warned that the online market poses some risks, such as fraud, counterfeiting, and cyberattacks, and urged the rich to be careful and diligent in verifying the authenticity and origin of the items they purchase.
