Monday, January 18, 2021

Table of Contents for Realty Biz

Rich on Realty

Top of the Pyramid report  

Rich on realty

Real estate as mode of investment continues to find favour with the ultra rich.


Signs of a buoyant economy are emerging with the change in the investment outlook and advent of the new government. The current edition of ‘Top of the Pyramid’ report from Kotak Wealth Management, the private banking arm of Kotak Mahindra Bank Limited, has captured this positive sentiment as featured in spends as well as investments. Kotak Wealth Management commissioned Ernst & Young LLP in developing the report. The Top of the Pyramid 2014 report has been prepared with survey results and analysis of more than 150 UHNIs across ten Indian cities and interviews with luxury service providers. EY used parameters such as GDP growth, inflation rate, past and projected financial and non financial asset class allocation and returns to determine projections.



The report dubbed ‘Ready for Change’ estimates a 16 per cent increase in the number of Indian UHNHs to around 117,000 in FY 2013-14, and expects it to triple over the next few years. Consequently, the net worth of UHNHs is projected to surge at an annual compounded rate of 34 per cent from an estimated Rs.104 trillion (Rs.104 lakh crore) in FY 2013-14 to Rs.408 trillion (Rs.408 lakh crore) by FY 2018-19. Interestingly, close to 45 per cent of current UHNIs are seen residing in non-metro cities and smaller towns.



Real estate investment decisions are wide ranged from long term decisions to finding a suitable retirement retirement home to exploring interests in agriculture. Real estate is also seeing interest from ultra HNIs in the areas of commercial real estate and luxury real estate. 

Ultra HNIs have a strong preference for investing into equity and real estate. The tangible nature and host of opportunities associated with real estate in terms of sale and rental is what attracts people to this asset class. As per the study two-thirds of the total distribution of wealth for ultra HNIs comes from primary business and real estate. Among ultra HNIs, professionals lay higher emphasis on premium real estate, whilst entrepreneurs and inheritors lay higher emphasis on their primary business. Real estate investment as a proportion of total investment remained constant at 29 per cent with limited fresh inflows into the sector.

Ultra HNIs have an optimistic outlook on this asset class, pointing out that prices haven’t corrected even during uncertain times. Of the total real estate investments, ultra HNIs tend to invest 50 per cent in residential real estate and 25 per cent each in land and commercial real estate. A leading trend is investment in luxury real estate in areas such as Pune, Coimbatore, Bengaluru, parts of northern districts of Kerala; where leading developers are coming up with luxury projects with designer architects targeted at the ultra HNIs.


C Jayaram, Joint Managing Director, Kotak Mahindra Bank Limited, said, “This year’s report aptly captures the mood and behaviour of the super-rich against the backdrop of all-round emerging optimism in the economy. 


Murali Balaraman, Partner, Advisory Services, Ernst & Young, added, “The optimism of changing environment is reflected in the aspirations of UHNIs as their spend get more luxurious and investment more exotic. We expect a continued momentum in the positive trend and even further acceleration, with UHNIs being an ever alluring segment.”

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