Top of the Pyramid 2013

FOREWORD
The global economic scenario improved, albeit marginally, in 2012 but a full-blown recovery appears to be farther away than what most people
anticipated last year. It is also fair to say that whatever little recovery has taken place is lopsided; things are looking up in the United States,
for instance, but many parts of Europe continue to languish in crisis.
The India story too has become a bit murkier. Ultra high net worth individuals (ultra HNIs) believe today that the turmoil in the economy is more
deep-rooted than what appeared to be the case last year. Some of that crisis of confidence in the economy’s ability to revive quickly is spilling
over into all aspects of ultra HNI behaviour, including spending and investments. This year, a number of ultra HNIs alluded to the possibility of a
wait and watch attitude on discretionary spends.
Yet – and this is a very heartening aspect for both wealth managers and luxury goods makers – wealth creation continues. The number of billionaires
in the country has gone up substantially and so has their wealth, resulting in a growing need to manage and preserve their wealth better to create a
longer lasting legacy. Consequently, estate planning, a hitherto neglected area, is becoming increasingly relevant for Indian ultra HNIs. It is an issue
that we have explored in some detail in this edition.
True to their nature, ultra HNIs are also finding new ways to create wealth even in these uncertain times and finding even newer ways to splurge in
search of exclusivity. The rapid growth in branded luxury home sales in recent years, for instance, is testimony to that. Not only are the ultra HNIs
gobbling up luxury homes in India, they are also looking at foreign destinations such as London and Dubai. In this year’s report, we shed more light
on the trends in luxury home purchases and the factors that drive exclusivity in this segment.
Kotak Wealth Management and CRISIL Research are extremely proud to present this third edition of their path-breaking annual report
'Top of the Pyramid (T.O.P.)’.
As always, happy reading.

C. Jayaram

Mukesh Agarwal

Joint Managing Director

President

Kotak Mahindra Bank Ltd.

CRISIL Research

INSIDE THE REPORT
About the Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 01
Executive Briefing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 04
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

06

1. Wealth creation amidst crisis of confidence in the economy
2. Ultra HNHs in India: Their numbers and their wealth
3. Future of wealth creation in the non-metros
4. The long-term India story: Are we at the cross-roads?

Spending Patterns: Attitudes, Motivation and the Ultra Wealthy Lifestyle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1. The downturn effect on ultra HNI spending behaviour
2. Spending patterns in 2012
3. Products they prefer to spend on
a.

Luxury watches

b.

Jewellery and precious stones

c.

Household electronics

d.

Apparel and accessories

4. Gifts and Travel

Special Focus: Luxury Homes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26

1. Dynamics behind a luxury home purchase
2. Why are more and more Indians buying luxury properties abroad?
3. Key influencers in purchase decision
4. How are real estate developers wooing the rich?

Investment Trends: Risk, Return and Wealth Preservation . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . 38
1. Sources of income
2. Income allocation

Special Focus: Estate Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1. Why is estate planning still not very popular among ultra HNIs?
2. Most popular forms of estate planning at present
3. Bright future of estate planning in India

46

ABOUT THE REPORT
Global economic growth is more buoyant now compared to the

banking space catering to 43 per cent of the 100 most wealthy (as per

conditions that prevailed when we came out with our previous

the Forbes India Rich List - 2012) in India.

report. A mild recovery is underway in the US, there is a new push to
reinvigorate the Japanese economy and Europe is far more stable now

CRISIL Research is India’s largest independent research house,

compared to last year when Greece, Italy, Spain, Portugal and France

providing comprehensive research coverage to more than 1,200

came in the grip of the sovereign debt crisis, in varying degrees.

Indian and global customers.

Consequently, wealth creation, which was hit during the previous

This report is based on two main strands of research:

year, hit new highs this year. One indicator of this is the number of

1)

A series of interviews that were conducted with senior personnel

billionaires in the Forbes Billionaires List, which hit an all-time high

at major global luxury brands, dealers of luxury brands and

of 1,426 in 2013, up by 16 per cent over 2012, propelled by resurgent

wealth managers.

asset prices. The combined net worth of these individuals has also
gone up by 17 per cent to $5.4 trillion.

2)

A commissioned market survey conducted by Feedback
Consulting, of 150 ultra HNIs, with conversations lasting up to one
hour. The survey took place between March 2013 and May 2013.

The net worth of ultra HNIs in India has also gone up, despite

Nearly 49 per cent of the respondents were from the four metros,

the dismal economic scenario. However, it is evident from our

while the rest were from other major cities such as Pune,

conversations with ultra HNIs this year that their confidence in the

Bengaluru, Ahmedabad and Chandigarh.

economy’s ability to recover quickly is far less optimistic compared to
the previous year. And that is inducing a degree of caution in their

CRISIL Research then undertook an extensive analysis of the results

spending behaviour, an attitude that goes against their grain.

of the survey and many of the conclusions were validated with our
primary sources.

In our previous reports, we have looked at behavioural aspects of ultra
HNIs and answered questions such as the priorities or motives of ultra

This report would not have been possible without the co-operation of

HNIs when it comes to spending or investing, their actions as a class,

all the survey respondents and the interviewees. We thank them for

their mindset and behaviour during times of adversity.

their invaluable support, the time they put at our disposal and the
insights they offered.

A deep knowledge of ultra HNI behaviour is a prerequisite for both
wealth managers and luxury brand companies to grow their

About Kotak Mahindra Group

relationships and expand their businesses. This year, we provide

Kotak’s evolution is a tale of consistent pursuit of opportunities,

valuable insights into ultra HNI behaviour with respect to luxury

despite a rapidly changing economic and business landscape. Today,

homes and estate planning. We are confident that the learnings

after more than 27 years since inception, it continues to gather

from this year’s report will be as beneficial as they were last year. This

momentum with an unwavering focus.

report continues to build on the foundation that Kotak Wealth
Management and CRISIL Research laid two years ago to track ultra HNI

As we retrace our steps to the initial days of our journey, one particular

trends year on year with specific reference to the Indian market.

day stands out in the crowd – 21st November, 1985. This was when
we identified an opportunity in the bill discounting market. That

Kotak Wealth Management is a pioneer and leader in the private
01 | T.O.P. India - Kotak Wealth & CRISIL Research

opportunity helped shape Kotak Mahindra Group.

In February 2003, Kotak Mahindra Finance Limited, our Group’s

goes beyond investments to provide a host of value-added services

flagship company, became India’s first Non-Banking Finance Company

such as Estate Planning Services, tax optimisation, etc.

to receive a banking license from the Reserve Bank of India (RBI).
Kotak Wealth Management is the only Indian Wealth Management
Thus was laid the foundation of Kotak Mahindra Bank Limited (KMBL).

firm to feature in the 'Top 25 Private Banks' of the world in the category

We are focussing our industry experience and capabilities to cater to

of 'Best Private Banking Services Overall' by Euromoney Private

changing customer aspirations.

Banking Survey 2013.

Our solutions are technology driven, contemporary and comprehen-

We have maintained our leadership position, thanks to the macro

sive, spanning consumer banking, commercial banking, corporate

environment, in-depth understanding of the client’s requirements and

banking, wealth management, retail and institutional equities, asset

of the various asset classes. This has resulted in Kotak being in a

management, life insurance and investment banking.

position to offer the widest range of solutions for the client.
Kotak Wealth Management is a part of Kotak Mahindra Bank Ltd.

We have come a long way since we began. Kotak now caters to
the diverse financial needs of individuals and the corporate sector,

About CRISIL Limited

nationally and internationally.

CRISIL is a global analytical company providing ratings, research and

About Kotak Wealth Management

risk and policy advisory services.

Kotak Wealth Management is one of the oldest and the most

We are India’s leading ratings agency. We are also the foremost

respected wealth managers in India, providing solutions to the high

provider of high-end research to the world’s largest banks and leading

net worth individuals. Kotak Group has over fourteen years of

corporations. With sustainable competitive advantage arising from

experience in wealth management, offering the widest range of

our strong brand, unmatched credibility, market leadership across

products and services. Our client base ranges from entrepreneurs to

businesses, and large customer base, we deliver analysis, opinions and

business families, as well as employed professionals. We provide

solutions that make markets function better.

financial advice and manage wealth for 43 per cent of India's top 100
families (as per the Forbes India Rich List - 2012).

Our defining trait is our ability to convert data and information into
expert judgements and forecasts across a wide range of domains, with

On the investment scenario, we believe that no single asset class tends

deep expertise and complete objectivity.

to perform consistently over a long period of time. Therefore, an HNI
needs to be given access to various asset classes, investment styles,

At the core of our credibility, built up assiduously over the years, are

themes and tenures. With this philosophy, Kotak has built a formidable

our values: Integrity, Independence, Analytical Rigour, Commitment

suite of products and services straddling this spectrum. Our offering is

and Innovation.

customised, based on the client’s profile and investment objectives.
This can be done through a transaction-based investment approach

CRISIL’s majority shareholder is Standard and Poor’s (S&P). Standard

or the asset advisory approach.

& Poor’s, a part of The McGraw-Hill Companies (NYSE:MHP), is the
world’s foremost provider of credit ratings.

The Kotak Wealth umbrella also includes Family Office. Family Office,
T.O.P. India - Kotak Wealth & CRISIL Research | 02

We address a rich and globally diversified client base. Within India, our

linkages. We deliver our research through an innovative web-based

customers range from small enterprises to the largest corporations

research platform. Our talent pool comprises economists, sector

and financial institutions; outside India, our customers include the

experts, company analysts, and information management specialists.

world’s largest banks and leading corporations. We also work with
governments and policymakers in India and other emerging markets
in the infrastructure domain.
We empower our customers and the markets at large, with
independent analysis, benchmarks and tools. These help lenders and
borrowers,

issuers

and

investors,

regulators,

and

market

intermediaries make better-informed investment and business
decisions. Our offerings allow markets and market participants to
become more transparent and efficient – by mitigating and managing
risk, taking pricing decisions, generating more revenue, reducing time
to market and enhancing returns. By helping shape public policy on
infrastructure in emerging markets, we help catalyse economic
growth and development in these countries.

About CRISIL Research
CRISIL Research is India's largest independent and integrated research
house. We provide insights, opinions, and analysis on the Indian
economy, industries, capital markets and companies. We are India's
most credible provider of economy and industry research. Our
industry research covers 70 sectors and is known for its rich insights
and perspectives. Our analysis is supported by inputs from our
network of more than 4,500 primary sources, including industry
experts, industry associations, and trade channels. We play a key role
in India's fixed income markets. We are India's largest provider of
valuations of fixed income securities, serving the mutual fund,
insurance, and banking industries. We are the sole provider of debt
and hybrid indices to India's mutual fund and life insurance industries.
We pioneered independent equity research in India, and are today
India's largest independent equity research house. Our defining trait is
the ability to convert information and data into expert judgements
and forecasts with complete objectivity. We leverage our deep
understanding of the macroeconomy and our extensive sector
coverage to provide unique insights on micro-macro and cross-sectoral

EXECUTIVE BRIEFING
Domestic economic conditions remain dreary but India’s ultra high

And the list of non-discretionary items is growing.

net worth individuals (ultra HNIs) are getting richer and many more
are joining the exclusive club. The confidence of ultra HNIs in the

In recent years, the growth in luxury home sales has been a very good

economy’s ability to rebound swiftly is still low but they are

indicator of the wealth creation underway in the country. An analysis

re-investing a lot more into their businesses vis-à-vis last year. They

that we undertook to figure out what drives ultra HNI purchases of

are increasing their spending horizons but simultaneously exercising

luxury homes found that the choice of location is the predominant

a degree of caution on ultra high value spends. They say they are less

factor. The luxury home is a status symbol for the ultra HNI and he

risk averse compared to the previous year, yet invest a lot more in

goes to great lengths to ensure exclusivity. So, factors such as brand

debt instruments.

aspects relating to the architect / developer, architectural significance,
amenities on offer etc. – anything that offers a chance at exclusivity

Don’t be Confused. That is the Indian ultra HNI for you, circa 2013.

becomes a swing factor in the purchase. Interestingly, luxury home

Making the most of even relatively bad times, getting wealthier each

purchases by ultra HNIs are not confined to India. Driven by greater

day and living life to the hilt. According to Forbes magazine, the

globalisation, comparable valuations overseas and investment

number of Indian billionaires has gone up by 7, from 48 in 2012 to 55

considerations, more and more ultra HNIs are purchasing luxury

in 2013. That, we believe, is just the tip of the iceberg. Over the next

properties abroad in places such as Singapore, London and Dubai.

five years, we expect ultra high net worth households (ultra HNHs) in

To meet this burgeoning demand, developers are resorting to

the country to more than triple to over 329,000 households.

methods such as whisper marketing and exclusive invitations.

So what, one may ask, is different this year? For one, the confidence of

Discipline and capital protection continued to be the line on invest-

ultra HNIs in the economy has taken a beating. This year, nearly 90 per

ments. Allocation to asset classes such as debt continued to be

cent of the respondents said that there is a downturn and a sixth of

significant in 2012. Risk aversion was a shade less as evidenced by the

them are not optimistic of an early recovery. Yet – and that is where

increase in exposure to real estate. Traditionally, investment in real

the contrast lies – there has been an increase in the money ploughed

estate is seen as medium risk in India, but ultra HNIs are increasingly

back by ultra HNIs into their primary business. On the other hand,

capitalising on opportunities such as distress sales as part of their

it is not perhaps so surprising because the primary business is where

short-term investments. In that sense, trends this year were not too

they generate most of their wealth. Either way, they are sending a

dissimilar compared to last year.

signal to policy makers.
Ultra HNIs are also finding that, in a world of scarce capital, many
Last year, most ultra HNIs viewed the slowdown as a temporary blip

countries are actively seeking them out and welcoming them with

and were gung ho on spends. This year, the pessimism on the

open arms. Globally, this is one of the factors instrumental in driving

economy is inducing a degree of caution in spend. And, that is curious

the estate planning business and ensuring healthy demand for

because it is an attitude that goes against the very grain of ultra HNI

professional wealth managers and estate planners. On the other hand,

behaviour. Some of them are biding time to see which way the

the estate planning business in India is at a very nascent stage.

economic wind is blowing before embarking on high value purchases

Because many family-owned businesses are traditionally passed on

such as top-end luxury cars, home mini-theatres etc. Perhaps, they are

to the next generation, the essence of estate planning in India is

just being street-smart because non-discretionary spending continues

on secrecy and trust. Hence, it is the family’s chartered accountant

unabated on apparel, luxury watches and high-end electronics.

or lawyer who usually also doubles up as an estate planner and

professional wealth managers are still not much sought after.
Still, in the years ahead, the reliance on family CAs / lawyers will
decrease because the newer generation of ultra HNIs is more aware
of the nuances of estate planning and the niche products that are
being offered by professional wealth managers. As the India story
unfolds in the long term - and the number of ultra HNIs zooms and
their coffers swell - estate planning is a business that will not only
grow but thrive.


INTRODUCTION
The crisis engulfing the global economy has eased somewhat since

are growing wealthier and appear to remain largely unaffected by the

our previous report (Top of the Pyramid 2012) but it is by no means out

economic cycles.

of the woods yet despite the modest recovery of the US economy.
Much of Europe still remains in the throes of a sovereign debt crisis

The number of billionaires in the Forbes Billionaires List is at an all-time

and the bailout of Cyprus this March is a grim reminder that normalcy

high of 1,426 in 2013, up 16 per cent over 2012, propelled by resurgent

in that part of the world is quite some way away. The BRICS nations are

asset prices. The combined net worth of these individuals has also

also not exactly in the pink of health, either.

gone up by 17 per cent to $5.4 trillion.

But if one were to assume, such a woeful economic climate would

This year, gainers outnumbered losers by 4 to 1, which is in sharp

have a dispiriting influence on the global wealthy, one would not be

contrast to the previous year, when there were nearly as many gainers

more wrong. As the Forbes Billionaires List suggests, the global elite

as losers.

NUMBER OF INDIANS ON FORBES LIST* NET WORTH ( ` BILLION)

2013

2004

1996

55 Indians=
11,000 ` Billion

* Forbes Billionaires List - 2013
Source: T.O.P. India - Kotak Wealth & CRISIL Research


3 Indians=
212 ` Billion

9 Indians=
1,157 ` Billion

Indians too have done well. According to Forbes, the number of

be a hasty and not entirely correct one. Is the subdued economy

Indian billionaires has gone up by 7, from 48 in 2012 to 55 in 2013,

hitting luxury spending? Or is it that this year's reaction to the

notwithstanding the dreary domestic economic environment that

downturn is a public relations exercise, a politically correct statement

has prevailed over much of last year and so far this year. And more

in tune with the times?

people will join this crème-la-crème in future. Over the next five
years, we expect ultra high net worth households (ultra HNHs) in the

The truth probably lies somewhere in between. Last year, one ultra HNI

country to more than triple to over 329,000 households.

had remarked: “We are used to a certain lifestyle and it is not easy to
change it, even if there is a slowdown – it is not impacting us so much

The defining finding of this year's survey of ultra high net worth

that we need to change or cut our lifestyle.”

individuals (ultra HNIs) is that a surprisingly large percentage of
respondents believe that a) there is a downturn, b) an early recovery is

This year, because of the lingering uncertainty on the economy, many

not in sight. Nearly 90 per cent of the respondents agreed that there

are not so optimistic. Moreover, many of these ultra HNIs are owners

is a slowdown and around 14 per cent felt that the economy would

of businesses that employ thousands. It is, therefore, prudent for

recover only by the end of 2014; the timeline for recovery indicated

many of them to project a level of austerity in their public and personal

by about 65 per cent varied from mid-2013 to mid-2014, with a bias

life at a time when the wages of their employees are under pressure

towards the latter.

due to the weak economic environment, which has, in turn, affected
business revenues and profitability. Vikram Pandit took over as the

For economy and industry watchers, that prognosis should be a cause

CEO of Citibank at a time when the bank's finances and survival were

of concern, coming as it does from people who are either primarily

under a cloud. As the media widely reported at the time, Pandit took

businessmen or those who manage businesses. It indicates a level of

only $1 in salary in his first year: it was not because the bank could not

pessimism about the economy that we did not encounter last year.

pay him a commensurate salary, but it was Pandit's way of indicating
in those troubled times that austerity begins at the top.

To be fair, we had alluded to such a possibility in our 2012 report.
“Conversely, if the India story is either compromised or delayed,

On the other hand, there are some who are postponing discretionary

even the unthinkable could start appearing within the realm of

spend on ultra high value purchases (such as top-end luxury cars,

possibility – for instance, the cautious behaviour that is currently

yachts, home mini-theatres etc.) preferring to wait and watch to see

evident on investments could well spill over into spending.”

which way the economic wind is blowing before committing to their
purchases.

More importantly, the pessimism of ultra HNIs about the economy
has caused a change in their perception on spending: nearly a third of

It is in this context that one should read the response of 33 per cent of

our respondents indicated that their spending has been adversely

our respondents who said that compared to the previous year their

impacted. This is starkly different from last year, when most

spending was down by 20-25 per cent. Here too, the bulk of the impact

respondents dismissed our query on the downturn with an almost

is on discretionary spend; spending on non-discretionary items such

derisive “What? Downturn!” look.

as apparel, high-end mobiles and electronics has hardly been
impacted.

Although it is tempting to jump to the conclusion that the super
wealthy are cutting down on their spending, that would perhaps

But increasing their wealth is only one part of the picture on the

proportion of India's businesses are family owned and are passed on

global wealth landscape this year. On certain other fronts, things

from generation to generation.

have certainly not been very hunky-dory. A defining image that
eloquently captured one of the concerns of the global super-wealthy

These concerns apart, the desire to live luxuriously is only increasing

this year was the meeting in January between one of France's film

and items that are part of discretionary spending only seem to be

legends and the Russian president, wherein the former was granted

growing due to the heavy, technology-driven lifestyle and the

Russian citizenship. What made the event extremely unusual was

numerous opportunities that abound to become rich in today's India.

that this beloved son of France is not only one of the most decorated
and awarded icons of French cinema, but is also a very successful

This is not a phenomenon that began last year or the year before. India

businessman and vineyard owner. It was the gripping finale to a

has had extremely rich individuals in its ranks in the past too, but they

tax debate that began last year after the newly elected French

were few and far between. What really tipped the scales and propelled

government proposed a 75 per cent tax on the super-rich.

a spectacular jump in the number of ultra HNIs in the country was
the domestic liberalisation process during the 1990s. A series of

The tale of the French super-rich is not just about the French alone, it

path-breaking economic and capital market reforms during this period

is a story that is unfolding across the globe in varying degrees. In many

not only freed the economy, but also stimulated entrepreneurship,

parts of Europe and elsewhere, governments are seeking to increase

enthused capital and wealth creation.

taxes on the ultra wealthy as part of measures to bolster their sagging
economies. On the other hand, countries such as Belgium, Russia and

In the years that followed, growth unfolded at a frenetic pace in the

Britain are among those that are actively wooing the global wealthy

IT/ITES sectors, millions were drawn into the stock market frenzy that

to relocate to their shores to rejuvenate investment in their territories.

resulted from liberalisation of the capital markets, and average income
levels rose multifold. As long pent-up aspirations were unleashed,

Welcome to the new world! A world where some countries,

businesses responded to the explosion in demand for a variety of

desperately seeking scarce capital, are increasingly offering attractive

products (both discretionary and non-discretionary), which eventually

incentives to entice the progenitors of capital to settle in their land

created millionaires and billionaires.

and help it grow, while some others are seeking to increase taxes on
the rich. The global wealthy are definitely in the telescopic sights of

Today's environment is a sea change from what it was a few decades

policy makers and what unfolds on this front will have a heavy bearing

ago. Luxury homes at astronomical prices (comparable to luxury

on future ultra HNI behaviour. It is also obvious that since capital

homes in the world's richest residential districts) are today being

protection is their prime motivation, ultra HNIs will relocate to areas

constructed in cities such as Delhi, Mumbai and Bengaluru and are

that will treat them favourably.

still finding many takers, which would have been unthinkable a
few years ago. Only a few weeks ago, a property in a prime location

In India, as it became clear that previous estimates of an early

in Mumbai went for as high as ` 118,000 per sq ft, reinforcing the

economic recovery were off the mark, and the government sought

perception that downturns don't matter where wealth is concerned

fresh revenue-raising avenues, North Block kick-started a debate

and where there is material desire.

on the desirability of an inheritance tax, igniting concern among
domestic ultra HNIs. Understandably so, because traditionally a large


In the long term, as India's economy grows further and it moves to

We estimate that the total net worth of Indian ultra HNHs will reach

regain its status as a global economic superpower after losing it during

` 380 trillion in 2017-18 from an estimated ` 86 trillion in 2012-13. This

the Industrial Revolution, more and more people will move up the

growth in net worth will be driven predominantly by growth in the

income bracket due to the steady increase in average income. This will

number of ultra HNHs and income growth.

not only fuel changes in the attitude towards wealth and luxury
living but will also exponentially increase the number of wealthy in
the country.

NUMBER OF ULTRA HNHs TO TRIPLE
OVER THE NEXT 5 YEARS TO 329,000

The Indian Ultra HNH
In our inaugural report, we had defined an ultra high net worth
household (ultra HNH) as one having a minimum average net worth of
` 250 million essentially accumulated over the past 10 years, which
as per CRISIL’s proprietary tool ’IDeA’ (Income and Demographics
Analysis) gets mapped to a minimum income of ` 35 to 40 million.

TOTAL NET WORTH OF INDIAN HNHs
TO GROW 4.5 TIMES TO
` 380 TRILLION BY 2017-18

3-fold growth in ultra HNHs
over the next 5 years

329,000

2012-13(E)
*

100,900

2017-18(P)

` 380 Trillion
2017-18(P)

At present, there are no validated estimates of the number of ultra
HNHs in the country. If we consider a household with a minimum net
worth of ` 250 million, there are more than 100,900 ultra HNHs in India
#

as of 2012-13. Although this number represents a meagre 0.03 per

` 86 Trillion

cent of the total households in India, it is poised to more than triple to

2012-13(E)

over 329,000 households by 2017-18.

*

Also read as ` 380,000 billion
Also read as ` 86,000 billion

#


Over half of the ultra HNHs in the country continue to live in the four

per cent. The rest are spread across the country. These numbers will

metros, which is understandable because these cities are the financial

eventually change in favour of the non-metros but only in the long

epicentres of their respective regions. The other top 6 cities account

term, as the benefits of development percolate down to all regions.

for slightly over 13 per cent and the next 40 cities are home to about 15

NON-METRO HOUSES ALMOST
HALF OF ULTRA HNHs

54.0%

Metros
13.0%

(Other top 6 cities)

15.0%

(11-50 cities)

18.0%

(Rest of India)


Unlike before Independence or in the early years after that, when they were most likely to have been from the upper class or the nobility, the Indian
billionaires of today come from varied backgrounds. This is testimony to the fact that wealth creation through inclusive economic development
is truly a great leveller.
Entrepreneurship is clearly the dominant source of wealth in India, but fast-growing service industries such as technology and financial services too
have catapulted many hitherto middle-income group households into the ultra HNH bracket.
Based on our findings, using parameters such as source of wealth, motivation for wealth creation, spending behaviour, investing patterns, attitude
towards charity/philanthropy and perpetuation of wealth, we had, in our inaugural report, classified the Indian ultra HNI into three groups:
•

Inheritors

•

Self-made

•

Professionals

Sources of wealth
Inheritance; entrepreneurship

DECODING THE DNA
OF THE
ULTRA HNI

Motives for wealth creation
Wealth preservation

Entrepreneurship

Self-recognition
Self-actualisation

Attitude to perpetuation of wealth

Attitude to charity

100,900

329,000
Compassion; gives money, less time

2012-13(E)

Wealth needs to remain within the
extended family

2017-18(P)
Empowerment; rarely gives time

Wealth is unconditionally for
immediate family

Responsible and conscious;
gives money and time

Wealth is for family, but they must
strive to merit wealth

Approach to investing
Organised

Drivers of spending

Informal

Maintaining luxurious living

Professional

Attaining luxurious living
Value

THE INHERITOR

THE SELF-MADE

THE PROFESSIONAL

What sets these ultra HNIs apart from others is the sheer value and the type of assets they own. It is not often that one gets to build a 27-storey
building for one self, with three helipads or have a 1-acre penthouse nearly a mile above, in the sky.
Inevitably, in keeping with the need to maintain a flamboyant lifestyle, they are very heavy spenders on high quality homes, food, clothing,
education, travel and family vacations.

In 2012, despite the concerns that they expressed on spending, ultra

or school for their children.

HNIs continued to spend the most on apparel, luxury watches and
high-end electronics all of which are non-discretionary spends. But

This year, we analysed luxury homes and found that the choice of

luxury car makers were struggling with sales and reported a bad year.

location is the single-most important factor driving the ownership of

However, the downturn has certainly not spoilt the vacation plans of

a luxury home. The choice of location is paramount because a luxury

the ultra HNIs. A significant percentage of non-metro ultra HNIs who

home is a status symbol and represented exclusivity. Among the

travelled overseas continued to combine their trips with shopping for

Inheritors and the Self-made, the preference is for a customised villa,

their favourite brands, particularly clothes and watches.

whereas the Professionals are keen on a readymade villa / bungalow or
a penthouse in a multi-storey tower in an upmarket locality. This was

In investments, last year’s disciplined approach – with the over - arching

followed by brand aspects relating to the architect / developer and the

sentiment being low risk and maximum protection – continued this

amenities on offer. Interestingly, many Indians are also increasingly

year as well, which is understandable because there is only a modest

purchasing luxury properties abroad in places such as Singapore,

improvement in the economic climate. In 2012, allocation to debt

London and Dubai. Financing purchases of luxury homes is not very

continued to be significant; real estate too retained its flavour.

popular. In fact, exclusivity is the name of the game even on marketing

A majority of the respondents said that they would continue with the

luxury real estate. Developers resort to whisper marketing, exclusive

same approach next year as well, but may increase their exposure to

invitations and other techniques akin to what the world’s most

real estate. Traditionally, investment in real estate is seen as medium

exclusive clubs do to get members (For details, see special focus

risk in India but what our survey this year also suggests is that people

on luxury homes).

are increasingly capitalising on opportunities such as distress sales as
part of their short-term investments. Clearly, this is a reflection of the

We also looked closely this year at estate planning. Estate planning,

low confidence that they have in an early economic recovery.

we discovered, is at a very nascent stage in India. In fact, even the
practice of writing Wills is not widespread among the wealthy!

An encouraging phenomenon this year was the gradual improvement

Because many family-owned businesses are traditionally passed on to

in business confidence. Although the economic climate remains

the next generation, the premium is on secrecy and trust; hence, it is,

subdued and businesses are still hurting due to consumer caution and

traditionally, the family’s chartered accountant or lawyer who also

weak demand, there has been an increase in the money ploughed

doubles up as an estate planner. Nevertheless, we believe that the

back by ultra HNIs (both Inheritors and Self-made) into their primary

reliance on family CAs / lawyers may be decreasing as the ultra HNI

business (over 30 per cent in 2012 compared with around 24 per cent

becomes more aware of the nuances of estate planning and the niche

in 2011). Unlike last year, a majority of the respondents said that

products and services that are being offered by professional estate

they had ploughed back over 30 per cent of their income into their

planners. (For details, see special focus on estate planning).

primary business.
As we had opined last year, it is tempting to dismiss the economic
Last year, we had looked extensively at two segments, luxury cars

travails of the short and near term as by-products of global economic

and education. We had found that in both cases although the Indian

integration and continue to harp on the bright long-term picture for

ultra HNI is extremely conscious of the uniquely Indian setting that

India. Clearly, the events of the last two years have severely dented

he lives in, he is also increasingly thinking like his global peers. Thus,

the confidence of the business class in policy makers. “I feel the

exclusivity is the most important criterion be it their choice of car

country requires unified political cohesion or vision to move in the


right direction towards economy. The political will is missing,” one
respondent noted in this year’s survey.
It is important that liberalisation of the economy is further intensified
so that India can again regain the confidence of both domestic and
foreign investors, and the economy can bounce back and sustain a
higher growth spiral. This will, in turn, vastly increase opportunities for
more people to become rich and join the ultra HNI club.
The last two years have laid threadbare many of the problems
besetting economic progress, be it policy logjam, delays in project
clearances etc. If policy makers do not grasp the bull by the horns
now, there is a danger that the hope and hype that was generated
about India both globally and domestically in the boom years from
2003 to 2008 will remain just that: hype.


SPENDING PATTERNS
Downturn effect: Non-discretionary spend rises;
caution creeps into discretionary purchases

home theatres, top-end cars, yachts, aircraft etc.) until they get the
sense that an economic recovery is well underway.

The popular adage ‘What’s good for the goose is good for the gander’

Last year, in percentage terms, spending as a proportion of income

is certainly not applicable to the spending habits of an ultra HNI.

was up nearly 6 percentage points to 28.3 per cent. Reflecting the

Here, exclusivity is the name of the game.

caution on spend, particularly on discretionary purchases, this year
that proportion is 29.1 per cent, only a modest 1 percentage points rise.

As an ultra HNI moves up the pecking order within the rarefied ultra
HNI surroundings, his items of non-discretionary spend tend to rise

The Self-made spent more in percentage terms, but not by much:

quite disproportionately.

the difference with both Inheritors and Professionals was only a few
basis points.

These two factors together drive what are perhaps the two
fundamental categories of ultra HNI purchases: luxury products and

Last year, both Inheritors and Self-made increased spending by cutting

luxury experiences.

back on investments in primary business and philanthropy, whereas
the Professional did that by dipping into his savings. This year, there

Luxury products include top-end cars such as a Lamborghini, Rolls

is a sea change in this regard. Among Inheritors and Self-made,

Royce, Aston Martin or a luxury watch such as Patek Philippe, Breitling,

investment into primary business has gone up substantially. In fact,

Panerai or Oris.

as a proportion of income (31.2 per cent), it is the highest ever in the
three years since we began this annual survey. Both the Inheritors

On the other hand, a luxury experience could be, for instance,

and the Self-made have done this largely at the expense of

a customised stay at any luxurious resort in Machu Pichu in Peru or

investments in personal wealth. Understandably, for the Professional,

even an exclusive safari complete with all the luxury paraphernalia,

the proportion of investments in personal wealth is far higher (slightly

deep in the jungles of South Africa.

over a quarter of their income) because investment into primary
business is not a significant activity for them. For the economy, the fact

So it was understandable that last year most respondents dismissed

that the ultra HNIs, most of whom are entrepreneurs or business

the possibility of any scaling down on their spending because the

families, are reinvesting into their business is certainly an encouraging

economic climate both globally and domestically was subdued. Not

sign in view of the sharp decline in private sector investments in the

too many expected the economic downturn to continue for long and

last couple of years. It is perhaps an early signal of the turnaround

were treating it as just a passing phase.

in private sector investments.

This year, the response was not as decisive, revealing a far greater

Change in spending habits

degree of uncertainty on the economy. Ultra HNIs have not stopped

An interesting finding this year is the Professional appears to be very

buying gold or diamond jewellery, apparel, luxury watches, high-end

clear on how much he wants to spend: Across the three years of our

mobiles and electronics. But in this year’s survey more people,

survey, we found that his proportion of spend as a percentage of

compared to last year, seemed to allude to the possibility of

income hovers around 28-29 per cent.

consciously postponing high-end discretionary purchases (private


Unlike the Inheritor and the Self-made, the Professional is not as
overwhelmingly consumed by the desire to generate and accumulate
wealth for his progeny. Professionals place a far greater premium on

ABOUT 1/3 rd OF ULTRA HNIs INDICATED
CHANGE IN SPENDING PATTERN IN 2012

good education and hard work and encourage their children to
achieve success on their own.
Yes

No

Therefore, if required, the Professional dips into other heads such as
savings and investments for personal wealth to maintain his lifestyle.

Expenses

This was very evident last year when the Professional’s proportion of
savings dipped by nearly 3 percentage points.
By contrast, the proportion of spend is far more erratic for both the

Charity

32.8%
67.2%

17.2%
82.8%

Inheritor and the Self-made: on an average, it has varied from 20-22
per cent in 2011 to over 29 per cent in 2012.
Instead, what the Inheritor and the Self-made appear to have
maintained fairly constant across all three years is investment into the
personal business. Clearly, this is because their earnings are generated

Growing Wealth

Savings

23.3%
76.7%

32.2%
67.8%

primarily from their businesses. Both the Inheritors and the Self-made
reinvest around a third of their income back into their business.
This year’s survey also buttressed our previous finding that the
Professional is far more inclined towards charity than the others.
We found last year that the Professional’s savings shrank nearly

Investment

Others

34.6%
65.4%

27.7%
72.3%

3 per cent even as his contribution to charity / philanthropy rose.
This year too, the Professional allocated close to 6 per cent of his
income to charity, nearly the same as last year’s levels.
To sustain their high-end lifestyle, ultra HNIs as a class continued
to spend a significant portion of their overall expenditure on
domestic and international branded wear, customised holiday
packages, luxury watches, jewellery, household electronics, diamonds
and precious stones.

A third of the respondents suggested that their spending had been
adversely hit by around 20-25 per cent. In fact, during a downturn
all categories indicated that they spent less on luxury purchases
(discretionary spend, which normally includes premium cars,
international designer apparel, international travel etc.) By contrast,
non-discretionary spending has hardly been impacted.


NON-DISCRETIONARY SPENDS
REMAIN UNABATED

41.2%

LIFESTYLE SPENDING CONTINUES
EVEN DURING DOWNTURN

33.2%

35.0%

51.0%

14.0%

Apparel/
Accessories

Discretionary

58.8%

66.8%

29.9%

61.0%

53.0%

15.2%

Exclusive holiday
packs

9.1%

Home decor/
Electronics

Non-discretionary

31.8%

36.1%

49.6%

14.3%

Jewellery/Diamonds/
Precious stones

Normal times
Downturn

36.1%

In a normal year, the discretionary to non-discretionary spend ratio
is around 41:59; during a sustained downturn, our survey found, that
changed to 33:67. Again, the Professional is far less likely to postpone
luxury purchases even in a bad year, compared with the Inheritor and
the Self-made.


45.9%
Luxury
watches

18.0%

31.4%

34.2% 34.4%
Others

Discretionary
Non-discretionary
Will not spend / unlikely to spend

APPAREL / ACCESSORIES EMERGES AS KEY SPENDING AVENUE

7 %
.3

7.2%

Jewellery/Diamonds/
Precious stones

Exclusive holiday
packs

7.7%

52.3%

12.9%

Home decor/
Electronics

Luxury
watches

Apparel/Accessories

12.6%

Others

Even during a downturn, apparel and electronics continue to be the most sought after avenue to spend for the ultra HNIs.


The number of ultra HNIs who prefer to shop in India, even for global

As more foreign luxury product manufacturers set up shop in India,

luxury brands is also growing steadily. As most luxury brands are now

concerns regarding quality and variety of the products are also slowly

available in India, there is less reason to shop abroad, particularly for

fading. But the rupee dollar rate is also an important determinant in

ultra HNIs in the metros. The availability of luxury brands declines as

whether to make purchases in India or overseas. Last year, the rupee

one moves away from the metros, so a lot of ultra HNIs from the

was very weak against the dollar, and that played a part in deciding

non-metros combine overseas vacations or business trips with

whether to buy luxury products abroad or in India.

shopping for their favourite international products (which happens to
be international designer apparel).

INDIA: PREFERRED SHOPPING DESTINATION WITH IMPROVED ACCESS TO LUXURY BRANDS

India
Abroad

74.9%
72.7%
25.1%
Home decor/
Electronics

67.0%
27.3%
Jewellery/Diamonds/
Precious stones

Apparel/
Accessories

64.4%

35.6%
Others

56.1%

43.9%
Exclusive holiday
packs



33.0%

50.0%

50.0%
Luxury
watches

Gifts and travel
The ultra HNI continues to spend on immediate family, close friends

Despite the staggering rise in gold prices during the year, gold

(through gifts) and celebrations of family occasions. Among the items

continues to be bought primarily for beautification purposes. It is no

of spend on immediate family, diamond and gold jewellery continues

secret that, since time immemorial, Indians of all hues and shades

to be the most popular followed by cars and clothes. In addition to

have been enthralled by gold jewellery and continue to be the large

luxury watches, mobiles are becoming increasingly popular as gifts to

consumers on the planet of the yellow metal in jewellery form.

close friends.

JEWELLERY IS THE MOST GIFTED ITEM TO FAMILY MEMBERS

42.6%
Jewellery

16.5%
Mobile

Others

Cars and
bikes

Watch

Tour/
Trip Voucher
Flat/Villa


15.5%
14.4%
5.9%
3.4%
1.7%
*Others include: Apparel, Electronics, Gift vouchers,
Household accessories


Family occasions such as birthdays, weddings and anniversaries,

with celebrity performers / party hosts who may either be direct

business launch or success parties etc. continue to be celebrated in a

acquaintances or friends. Due to the scale of the party, the entire

big way. Even for exclusive small-affair parties people are increasingly

arrangement may not be handed over to a professional event

seeking expertise to make it a success. The concept of using event

manager on professional terms. Instead, the celebrity / friend manages

managers for family functions is gaining in popularity but only

the show himself. But here too, considering the social peer pressures

gradually (see chart below). One reason for this is that for small family

that the ultra HNI operates under, it is only a matter of time before

functions (such as birthdays) most ultra HNIs get in touch directly

professional event managers make greater inroads.

TYPES OF EVENTS ORGANISED BY ULTRA HNIs

EVENT MANAGERS GAINING HIGHER GROUND

Yes
No

Adhoc
Regular

Launch party

62.0%

38.0%

Launch party

Wedding or wedding
related ceremonies

58.0%

42.0%

Wedding or wedding
related ceremonies

38.1%

61.9%

Celebrity
participation

54.0%

46.0%

Celebrity
participation

44.7%

55.3%

Business/
Professional success

53.0%

47.0%

Business/
Professional success

Anniversary

Birthday of
family member

48.0%
45.0%

35.6%

37.0%

52.0%

Anniversary

22.4%

55.0%

Birthday of
family member

22.7%

Others



64.4%

63.0%
77.6%
77.3%

75.0%

Source: T.O.P. India - Kotak Wealth & CRISILResearch

25.0%

The ultra HNI is an avid traveller, be it for business or leisure or when

As a pastime, travelling is closely followed by dining out and reading.

possible for both. In last year’s survey, we had noted that vacationing

The ultra HNIs travel overseas once or twice a year. On an average, the

was a top priority for them because many of them have slogged it out

Professional sets apart 1-2 weeks for travelling and vacationing with

in the workplace to reach the heights that they have.

family; nearly 2/5th of Inheritors and Self-made said that they
vacationed for about a week in a year. The most preferred destinations

Unlike the Inheritors or the Self-made, who own businesses and

for Inheritors and Self-made are beaches and weekend getaways

perhaps employ others in large numbers to run them, workplace

close to their place of stay whereas islands or mountaineering / treks

burnout is an indisputable aspect of life that the Professionals

are the top preferences for Professionals. The downturn has certainly

confront. A greater number of Professionals, compared with both the

not spoilt the vacation plans of ultra HNIs; only 13 per cent of our

Inheritors and the Self-made prefer exclusive luxury holiday packages

respondents said that it had.

to take a much-needed break from the workplace and drown away
their worries.

VACATION PLANS UNCHANGED:
BEACHES CONTINUE TO BE MOST PREFERRED VACATIONING LOCATIONS

Beach locations

22.7%

Weekend Getaways

16.8%

Islands

Mountains / Treks

14.3%

14.3%
Religious / Spiritual destinations

10.4%

Others

9.6%

Shopping destinations

7.9%

Spa Vacations

4.0%


Among overseas destinations Europe, New Zealand, Australia, and
South Africa are favourite vacation destinations. Europe, primarily
Spain, Italy, Switzerland and New Zealand are popular vacation spots
for adventure sports, while South Africa tops the list for wild life or
safari experiences.
Amongst beaches, Mauritius is the most popular destination.
Interestingly, many ultra HNIs said that they were as keen to visit
tourist destinations in India as those abroad. Popular weekend
getaways in India are Ooty and Coorg for ultra HNIs based in the
South and Ladakh, Darjeeling, Shimla, Jaipur and Udaipur among
ultra HNIs in the North and the East.
One of the fastest growing segments in luxury spending is the
concept of a luxury experience. A luxury experience dovetails
exclusive customised services such as spas, safaris, exotic island tours
and underwater vacationing at leisure destinations such as Machu
Pichu in Peru or the Maldives. A number of luxury product makers
are tapping into this need for exclusivity and offering ultimate luxury
experiences such as visits to the premium car plant to see the status
of the car that the ultra HNI has ordered and combine it with a
special event such as adventure sports / river rafting etc at nearby
luxury locales.


SPECIAL FOCUS: LUXURY HOMES
As one of the world’s oldest civilisations, India has a very rich and

In their search for the exclusivity that sometimes eludes them at home,

ancient heritage as far as luxury homes are concerned. Ancient written

an increasing number of ultra HNIs are also scouting and buying

records of various Chinese and Arab travellers during medieval times

luxury homes overseas. Whatever the reason and wherever the

and British historians (when the British ruled India) describe in marvel-

purchase, the guiding factor is exclusivity, which in turn subsumes

lous detail the stunning grandeur, ornate architecture and multitude

two aspects:

of riches that adorned the royal palaces and the almost godly life that

•

Location

the rich and the rulers led in those days. The erstwhile palaces in

•

Branding

Jaipur, Udaipur and Mysore – whose magnificence and architectural
splendour thrill many visitors even today, and many of which have

We have analysed both these aspects in greater detail and also

today been converted into five-star luxury hotels – are stunning

explored the reasons that are driving more and more ultra HNIs to buy

examples of the luxurious tastes that India’s ancient rich had.

homes overseas.

Even today, some of the most expensive and luxurious buildings on
the planet are in India – two private residences located in Mumbai
have been valued by credible sources as among the world’s most
expensive properties. Some more residences that are aimed at
rivalling the existing ones in terms of sheer size and luxury are
currently under construction in the city.
Vis-à-vis the past, though, one aspect is very different today. Unlike
the vast tracts of land that the ancient rulers utilised to set up their
luxurious abodes and indulge in their most lavish tastes, there are
no vast open spaces available in prime locations in the country for
today’s ultra HNI even if he or she could afford to buy them.
One way in which India’s ultra HNIs have overcome that handicap
and still tried to establish exclusivity (which is at the core of their
behaviour) is going skywards. This is a growing trend among top
industrialists and the cream of the ultra rich in cities such as Mumbai
and Bengaluru, home to some of the country’s top entrepreneurs
and business families. Huge penthouses, high up in the sky or
multi-storied towers housing just one family with different floors
dedicated for different purposes (such as parking area, gymnasium,
library, swimming pool, dining and reception area, lounge and party
area, etc.) are increasingly becoming the norm rather than the
exception.


Location: The foremost dynamic
The single, most important dynamic driving the modern Indian ultra

So every city has its prime localities where the ultra HNIs throng to buy

HNI’s purchase of a luxury home in India is location – every other

residential property and flaunt their lifestyle. In Mumbai, the places

consideration relating to size, furnishing, architecture and interior

where the high and the mighty would give almost anything to own a

decorations is relegated to the background compared to this aspect.

property include Cuffe Parade, Napeansea Road, Carmichael Road,

For ultra HNIs it is not just about owning a luxury home, it is also

Altamount Road, Malabar Hill, Worli and Bandra. Some of the other

about the exclusivity that the address affords.

most expensive residential localities in the country are Aurangazeb

WHAT DOES A LUXURY HOME
MEAN TO AN ULTRA HNI?

25.0%
Location

18.0%
Interiors

16.0%
Size

15.0%
Exclusivity

13.0%

8.0%

Architectural
significance

Automation

5.0%
Price


Road, Amrita Shergill Marg and Safdarjung Enclave in New Delhi,
Surjapur and Koramangla in Bengaluru, Boat Club Area and T-Nagar in
Chennai and Alipore in Kolkata.

LUXURY HOME EMBARKS
A STATUS QUOTIENT

For the right location, the ultra HNIs are sometimes willing to pay

A status symbol
An investment
Style statement
Others

staggeringly high prices, irrespective of the general state of city’s
property market. For instance, according to media reports, a sea-facing
duplex in Worli was sold for around ` 43 crore, valuing the property
around ` 1.18 lakh per sq ft. That made it one of the most expensive

58.6%

per-sq-ft apartment deals the country has ever seen and came at a
time when the country’s realty market is in general limbo.
Exclusivity in location, for the ultra HNI, need not mean only the
location. In Mumbai, for example, along with the location, a sea-facing

4.3%

view is the most sought after. Conversely, a location loses some of its
sheen if the sea-facing view is lost; in Mumbai, some luxury buildings
in normally sought-after areas are now becoming unattractive
because their sea view is being blocked by new, taller skyscrapers that
are coming up in the vicinity.
No matter which city they live in (metro or non-metro) and whatever
their age group, the overwhelming sentiment associated with the
ownership of a luxury home is the same. A luxury home is a status
symbol to tell the world that one has arrived. For nearly half of the
Inheritors and the Self-made, owning a luxury home was a status
symbol. “I would like to own a home in World One (Mumbai) as it is a
very exclusive residential tower. Having a house there gives great
status value,” a Mumbai-based ultra HNI said.
By comparison, investment plays on the Professional’s mind a lot more
compared to the others and fewer Professionals harped on the status
symbol. Only 30 per cent of the Professionals said it was a status
symbol whereas another 20 per cent said it was an investment.
“I associate a house in terms of investment. Capital appreciation is
key,” one Delhi-based Professional remarked.


13.0%

24.1%

MAJORITY PREFER A LUXURY HOME WITHIN THE CITY

45.2%

6.7%

20.7%

6.7%
20.7%

Upmarket within the city
Upmarket outside the city limits
A remote place
A place in the heart of the city
Exotic location

Majority of the ultra HNIs already reside in a luxury home in an

Nearly half of the Inheritors and the Self-made said that their luxury

upmarket area within the city. However, Professionals do not have

home should be in an upmarket locality within the city. In sharp

much affinity in having their luxury home within the city unlike the

contrast, nearly 35 per cent of the Professionals wanted it to be an

Inheritors and the Self-made.

upmarket area, but outside the city limits; about 20 per cent preferred
an upmarket area within city limits. A majority of Pune’s ultra HNIs too
preferred an upmarket area outside the city limits.


Branding closely follows location as key driver
After location, comfort and independence are the most important

For Inheritors and Self-made, independence also means freedom to

factors when purchasing and designing the interiors of their home.

build; they want to buy land in the place of their choice and then

“Plus providing some peaceful surroundings (not the noise and buzz of

construct a customised, standalone villa there or even a multistoried

the city). It need not be on the beachfront, it can be just a 10 minutes

tower as some of India’s wealthiest have done in recent times in

drive from the beach. In addition, it should offer the privacy from all

Mumbai and Bengaluru. By contrast, the Professional prefers to buy

sides. My neighbour should not be able to see inside my house,” one of

a readymade villa / bungalow or even an apartment in a multistoried

the respondents commented.

complex.

ULTRA HNIs PREFER BUILDING A CUSTOMISED
VILLA ON THEIR OWN LAND

1.0% 4.0%
1.0%

1
10.0%

36.0%

48.0%
Buy a land and build a customised villa in India
Readymade villa / bungalow in India
Readymade apartment in India
Buy a land and build a customised villa abroad
Readymade apartment abroad
Readymade villa / bungalow abroad


interiors are also in great demand. European designers, particularly

PROFESSIONALS PREFER
READYMADE VILLA / BUNGALOW

Italian designers, are some of the most sought-after by Indian ultra HNIs.
So, branded designer homes are increasingly gaining prominence
as living in a house designed by an ace architect / designer satiates
the ultra HNI’s desire for exclusivity within their social circles even

1.4%

while simultaneously spicing up their comforts. Many renowned real

2.8%

estate developers are, unsurprisingly, catering to this demand by

6.4%

4.2%
8.5%

10.6%

38.0%

roping in world-class designers for their exclusive luxury projects.

5.9%

For example, Lodha, Sunteck, etc. have tied up with renowned
designers such as Armani, Jade Jagger, etc. to offer unique designs

17.6%

and craftsmanship.

29.8%

41.2%

45.1%
53.2%

The micro-focus of ultra HNIs on designers and designer paraphernalia
for interiors also means that they are also clued in on the latest trends
in these areas. So they make their best, informed choices to ensure
that they get the amenities and the lifestyle that they want and ask for

Self-made
35.3%

changes wherever needed.

Inheritor
Professional
Buy a land and build a customised villa in India
Readymade villa / bungalow in India
Readymade apartment in India
Buy a land and build a customised villa abroad
Readymade apartment abroad
Readymade villa / bungalow abroad

ULTRA HNIs PREFER RENOWNED
ARCHITECTS / DEVELOPERS

53.0%

21.0%
Bathroom, floor
fittings, etc.

Thus, building a customised villa on own land emerges as the most
desirable form of luxury home especially amid Inheritors and
Self-made.
The stature of the architect or the developer is particularly important

Architects
/ developers
/ designers

26.0%
Furnishing

for the ultra HNI if they are purchasing a readymade villa. Interior
designers who can design the most contemporary yet luxurious


In terms of amenities, a personal swimming pool and a mini theatre are

Touchpad-controlled smart homes, health spa, multiple parking

almost-certain demands of all ultra HNIs across all age groups, cities

space, multiple swimming pools, yoga studio, multiple elevators,

and categories. In Aurangabad, Chennai and Coimbatore, the first

vehicle maintenance facility, a helipad on the roof etc. are among

choice of most respondents between these two choices was the

other amenities that the ultra HNIs like to install in their luxury homes

swimming pool, perhaps because of the hot and humid climate that

or mansions.

prevails in these cities for most part of the year.

MOST PREFERRED AMENITIES IN A LUXURY HOME:
PERSONAL POOL, MINI THEATRE
23.0%
17.0%

16.0%

16.0%

14.0%
9.0%
5.0%

Personal
swimming
pool/
Plunge pool

Mini theatre

Area to
organise
events and
concerts


Private gym

Private spa
/Sauna

Outdoor
kitchen/
Gourmet
kitchens

A wood
panelled
library

The world is my home
Propelled by increasing globalisation and India’s growing integration

An added attraction is that in today’s globalised world – where many

with the world economy, there is a small, yet growing tribe of Indians

of the ultra HNIs are jetsetters, not only travelling but also sometimes

who are buying luxury homes in other parts of the world. Many factors

living in different cities globally – owning a home overseas not only

are driving this trend.

makes eminent sense but is also a necessity. Most ultra HNIs send their
children abroad for study, so having luxury property in those locations

For one, due to the high density of population and limited availability

is convenient so that their children can live and study in the same

of land, privately owning huge tracts of property is today almost next

kind of luxury that they are used to at home. Due to the rapid spread

to impossible in key Indian cities such as Mumbai and New Delhi.

of Indian diaspora across all corners of the globe, there is also an

By contrast, expansive tracts of land that can accommodate huge

increasing awareness among Indian ultra HNIs of prime luxury

lawns, courtyards, swimming pools, tennis courts etc. is more easily

property locations abroad. Many ultra HNIs have close relatives or

available in many American and European cities, due to much better

friends who are settled overseas; constant, extensive feedback from

city planning and lower population density.

them keeps ultra HNIs abreast of key property price trends and
enables them to spot attractive buying opportunities in important

ULTRA HNIs ALSO HEADING OVERSEAS
FOR LUXURY HOMES

overseas locations.
What makes an overseas luxury property purchase decision easier
today is also the fact that valuations in Indian cities such as Mumbai
and New Delhi are now so high that they are comparable to valuations
in some of the top property locations worldwide. Mumbai, for
instance, is among the most expensive cities of the world. Some global

97.9%

studies reveal that prices in Mumbai are now comparable to property
prices in US cities such as Los Angeles and Miami, European cities such
as Rome and emerging market locations such as Istanbul, Rio de
Janeiro and Sao Paulo. Many of these emerging market cities are also
2.1%

fast becoming important centres of finance and trade either regionally
or globally and ownership of luxury properties in them is an alluring
prospect.
All other things being equal, factors that come into play in the
purchase decision include, among others: the extra lifestyle benefits
(such as a clean environment, better managed public infrastructure,
entertainment facilities, health and sanitation) that accrue in cities
such as London and New York; and the safe haven status that some of

INDIA

ABROAD

these cities offer (because they have been able to better withstand
global financial and economic turmoil).


In fact, there is evidence to suggest that, post the global financial crisis,

for giant domestic or top multinational corporations in various

the trend of buying a second or a third luxury home abroad has only

global locations. In the course of their stay, they seek out attractive

risen worldwide. This indicates that the global wealthy are increasingly

investment opportunities, although there is a miniscule set among

holding their wealth in tangible assets to offset risks arising from

them that buys a luxurious property in a particular city for a life

global political and economic uncertainty. In India, ownership of real

post-retirement because of the quality of living that it offers.

estate has always been a safe haven play because real estate has
always delivered attractive returns over the long term. Now, the ultra

These overseas properties also serve another very useful purpose: they

HNIs are extending their horizons to overseas locations, taking

serve as vacation pads for family and close friends. Most ultra HNIs

advantage of the relatively attractive valuations and the other

make it a point to visit their second (or third) luxury homes at least

intangible positives that these locations bring to the table.

2-3 times a year and spend a week to a fortnight there.

Currency fluctuations play an important part in the timing of a

This trend of purchasing property overseas is only set to grow as the

purchase. As far as the rupee is concerned, an appreciation of the

number of ultra HNIs who can afford, and want to buy property,

rupee is advantageous for the Indian buyer and vice versa. But ultra

increases in future. The only dampener to this otherwise buoyant

HNIs who hold their money overseas in different currencies, for

trend is the regulations that governments in many countries are

operational reasons or otherwise, sometimes take advantage of

bringing in on the purchase of second homes and luxury property to

volatility or shifts in other major currencies to make beneficial

control the rise in residential prices.

purchases. In recent years, one major attraction for buying property in
London has been the depreciation of the pound against the dollar.
Some of the fanciest districts in the world, such as Kensington,
Belgravia or Holland Park in London or prestigious locations such as
the Burj in Dubai and Nassim Road in Singapore are among the most
popular global locations for Indian ultra HNIs to own luxury residential
properties. Needless to say, in line with their social standing, their
homes in these overseas locations too are as tastefully decorated and
as diligently maintained as their primary luxury homes.
Interestingly, from a behavioural angle, the nature of the property that
ultra HNIs seek in these overseas locations differs according to
whether you are an Inheritor, a Self-made or a Professional. Inheritors
and Self-made are more likely to purchase land and hire renowned
architects and interior decorators to build customised villas that
incorporate their luxurious tastes. This is something the Professionals
are not very enthused about. In fact, what drives their purchase
behaviour is investment opportunity. Many of the Professionals work


Family consensus is key to purchase decision
The decision to purchase a luxury home is also arrived at after a lot of

different family members before they make a purchase. They are very

thought. After all, in major Indian cities today, the purchase of a luxury

interested in who the interior designer is, what amenities we are

home can lighten the pocket considerably.

offering and which country we are importing it from. For interiors,
Italian and some European designers are highly favoured,” one

For purchase of luxury residential property, a real estate agent of

developer said.

repute with a lot of understanding of the specific locality and local
market conditions and the ability to network well is still the most

“They (ultra HNIs) look out for exclusivity in almost everything, be it

sought after. Then, there are others such as family friends who may

wood from a specific forest area or marbles from Italy within their

be in the know of a particularly good property, or who may be willing

homes. In that sense, they want to know the very minute details of

to sell, or even financial advisors/wealth managers who may have

furnishings,” another Mumbai-based builder said.

information from their client network.
Whisper marketing or invitation buys are the most common strategies
that builders or their agents employ to market luxury homes. After
all, nothing can arouse the curiosity and interest of a ultra HNI more
than a pitch that he will own something that very few others will.
Often, the ultra HNI does not have to go scouting for a house himself.
“It’s the other way round,” one of them commented, when asked

REPUTED REAL ESTATE AGENTS
MAINLY ADVISE THE ULTRA HNIs
Reputed real estate agent
Friends / Family reference
Financial Advisor / Wealth Manager
Lawyers' recommendation
Ads in Business and property magazines
Internet property listing

how he searched for his home. “Known people, some business
acquaintances, and wealth management companies approached me.”
1.6%

9.3%

To lure ultra HNIs to their luxury projects, developers try to showcase
legacy in terms of past experience in building noteworthy structures

14.0%

or association with established brands. New entrants in the market
mainly associate with renowned branding partners, designers etc
to attract attention.
“We are attaching ourselves with ace architects / designers to
attract market attention and establish credibility,” an upcoming
developer said.

39.0%

21.5%

14.6%

Getting the ultra HNIs to finally purchase a property is also arduous,
patient work, considering that the value of the property will be a
few crores at the very least. “The rich mostly do multiple visits with


The key decision-maker, however remains the immediate family that

An interesting difference here was that over 50 per cent of the

will eventually stay in the house. Some degree of consensus is sought

Professionals said the final decision was made jointly with their

to be achieved within the family, but the final decision remains that of

spouse, only around 20 per cent of the Inheritors and Self-made said

the ultra HNI himself, at least in case of Inheritors and Self-made. “I am

the same. One probable reason for this is that both the Inheritors

the sole decision-maker for choosing the property. Dealings are done

and the Self-made are perhaps larger families with more than one

in consultation with my lawyers,” one ultra HNI, an Inheritor, stated.

generation of individuals staying together. In the Professional’s case,
it is mostly a nuclear family, both the husband and the wife are more
often employed and highly ranked career professionals.

DECISION-MAKER

Surprisingly, nearly 70 per cent of the respondents in Mumbai said that
the final choice was theirs alone, whereas in Pune a majority said

Myself

that the final decision was jointly that of the husband and the spouse.
In Bengaluru, only 10 per cent of the respondents said the decision
Myself, my spouse
and children

Me and my spouse

34.8%

was made along with the spouse; around 50 per cent said it was
theirs alone.
Finally, compared to the premium housing segment, finance
penetration is far lower in luxury homes, which is a bit of a surprise

26.0%

22.2%

considering the cost of luxury homes.
This trend is quite unlike that in luxury cars, where even the richest of
ultra HNIs take recourse to loans during purchase to take advantage of

My family and my
financial advisor

9.6%

6.7%
0.7%

My family and
my lawyer

Others


tax benefits and depreciation. The Professional, on the other hand,
prefers to take loans to finance the purchase.

INVESTMENT TRENDS
Despite global economy blues, 2012 signalled
a return to wealth creation
The recovery in the US economy, combined with expectations of a

Real estate prices were generally stable with an upward bias in all

gradual pick-up in global growth and a highly expansionary monetary

major territories including India in 2012. Gold and silver too gave

policy in most developed countries combined to reduce risk aversion

around 13 per cent returns in India. The price of gold corrected sharply

across most asset classes. Returns from most asset classes either went

in the early months of 2013, but domestic prices have been stable for

up or were stable in 2012, and this encouraging trend continued in the

the past month or so.

first quarter of 2013 in most markets.

Investment trends in 2012

In fact, even though income growth was slower due to subdued

The key source of wealth continues to be success in primary business,

economic growth in most countries and weak demand (that hurt

followed by real estate and investment in equity. This year, many

businesses), wealth creation continued unabated during the year

respondents also identified income from sale of business as a major

because returns from almost all asset classes were attractive be it

income-earner, but this appears to be only a one-off phenomenon,

equities, bonds or commodities.

perhaps indicating that some ultra HNIs have chosen this period to
exit unfavourable businesses.

The pick-up in wealth creation in 2012 was illustrated by the nearly
16 per cent increase in the combined net worth of the billionaires in

Both the Inheritor and the Self-made asserted that the bulk of their

the Forbes List 2013. It was quite a contrast to the previous year, when

wealth came from income from primary business and real estate (also

the combined net worth (Forbes Billionaires 2012) grew by a mere

inheritance, in the case of the Inheritor), whereas the Professional

2 per cent, one of the slowest in the past few years. Moreover, the

indicated that the biggest contribution was from equity. The Profes-

number of gainers in the Forbes List 2013 was four times that of the

sional appears to be far more confident in his ability to generate

number of losers, compared with an equal number of winners and

returns even from a lacklustre market. His propensity to take greater

losers the previous year.

risks in the market is also because he is generally highly educated,
and has the experience and expertise to understand the stock market

Much of this change was due to the performance of various asset
classes. Global equity markets fared well. The Indian market shrugged
off its dismal performance in 2011 and was one of the best global
performers in 2012, with the Sensex returning 26 per cent and the
Nifty 28 per cent. Other Asian markets too did well in 2012; both the
Hang Seng and the Nikkei gave nearly 23 per cent returns. In the US,
the Dow gave 8 per cent and the Nasdaq 16 per cent.
On a yearly basis, bond yield in global bond markets have been fairly
stable for the past few years, and that trend has continued. In 2012, the
average yield on the US 10-year g-sec was 1.9 per cent, close to the
previous year’s average. In India, the average yield on the 10-year g-sec
was 8.1 per cent, nearly the same as the previous year.

better than many others.

SOURCES OF WEALTH

Success in primary business
Real estate
Equity
Sale of business
Others

Success in primary business

Real estate

40.4%

14.7%

7.5%

24.6%

12.8%
Equity

Sale of business

Others


Although the economic climate remains subdued and businesses are

Unlike last year, a majority of the respondents said that they had

still hurting due to low consumer confidence and weak demand, there

ploughed back over 30 per cent of their income into their primary

has been an increase in the money ploughed back by both Inheritors

business, indicating a slight improvement in business confidence

and Self-made into their primary business (over 30 per cent in 2012

compared to last year. Compared to last year, therefore, investment
towards growing personal wealth declined in 2012 while allocation to

compared with around 24 per cent in 2011).

savings and charity either remained the same or went up marginally.

INCOME ALLOCATION

Expenses

29.1%
28.3%

Investment
into primary
business

Investment
for growing
personal wealth

31.2%
24.2%

16.0%

24.1%

Savings

Charity

Others

5.4%
4.4%

2.6%
2.7%

15.7%

16.3%

2012

2011

Despite the marginal improvement in business confidence, many still did not feel confident enough about the economic climate. Therefore,
‘low-risk’ and ‘capital protection’ continued to be catchall phrases pertaining to approach to investments this year too. Low-risk instruments such
as fixed deposits continued to be popular with ultra HNIs.


APPROACH TOWARDS INVESTMENTS

74.6%

25.4%

Self-made

70.2%

29.8%

Inheritor

41.2%

Opportunistic

58.8%

Disciplined /
Balanced

Professionals

28.9%

71.1%

Overall ultra HNI

During a period of volatility, the foremost consideration behind

approach despite the volatile market conditions.

investment (including, perhaps, tax planning aspects) is regular
income and protection for the future; growth is a secondary concern.

“While equity markets have given better returns, we are being

This is quite unlike the thinking in business where growth and profits,

cautious in planning our investments; real estate continues to be

and not protection is the chief objective.

my favourite,” one respondent stated.

Nearly 60 per cent of the Professionals and over 70 per cent of both

Last year, we found that younger, established ultra HNIs (in the 31-40

Inheritors and Self-made said that they are following a disciplined

age group) were more opportunistic than the older ones, who

approach to investments. There were also some interesting regional

focussed more on capital protection and adopted a disciplined

differences. Among the metros, ultra HNIs in Mumbai and Delhi were

approach. With discipline and caution continuing to rule the roost,

highly risk-averse compared with those in Kolkata and Chennai.

many ultra HNIs preferred to adopt a long-term approach to invest-

Among non-metros, a high percentage of our respondents (nearly

ments rather than a short-term one that is more characteristic of an

50 per cent) in Ahmedabad and Lucknow followed an opportunistic

opportunistic investor.


Risk aversion came down a little compared with last year but capital

Real estate continued to be popular this year also, along with debt.

protection still remained paramount. “The last two years or so, my

The Professional invested the most in stocks and shares, followed

approach has been defensive. The emphasis has been on capital

closely by fixed deposits and then real estate. Real estate investments

preservation than super-normal growth. There is no chasing of

have always delivered good returns in India, so it is generally perceived

equities but investing only when seen some value,” one ultra HNI

to be an attractive medium-risk investment and this is indicated by

remarked.

data through all the three years.

2012

CHANGE IN INVESTMENT PORTFOLIO

4.0%

7.0%
Alternate Assets

29.0%

30.0%
Real Estate

32.0%

29.0%
Debt

35.0%

34.0%
Equity


2011

Gold / silver investments remain popular and a healthy proportion

wealth to charity. Since then, a few other Indian ultra HNIs – including

of the total portfolio continues to be invested in these two precious

the promoter of a South India-based real estate company – have

metals. Highly risky avenues such as derivatives, hedge funds and

announced that they will transfer up to 50 per cent of their wealth to

structured products are still a no-no with ultra HNIs. Perhaps the

support philanthropic activity.

experience with these products (some of which are highly complex)
in 2008, mostly in the developed markets, is still too close to be

So, what will 2013 be like? Well, for one, risk aversion is likely

forgotten. Art as an investment continues to languish; this year, the

to decrease in 2013. As the economic climate improves further,

percentage of ultra HNIs who said that they had invested in art was

indications are that ultra HNIs will reduce their exposure to debt

lower than last year. Ultra HNIs are continuing a similar approach

(primary fixed deposits) and increase their investments in real estate

because many of them now believe that the economy is unlikely to

next year. Inheritors and Self-made also noted that they will increase

recover before the endof 2014.

their investments into their businesses.

Taken together, these trends indicate a gradual improvement in

For wealth managers in India, the current period is only a temporary

business confidence and increased risk aversion. In a volatile market,

lull in an otherwise bright future. Once the economy comes back on

fixed deposits, cash and gold / silver are seen as low risk. Real estate,

track and the investment pie grows, opportunities will continue to

ULIPs/insurance, mutual funds, PMS schemes, commodities, bonds

unfold for domestic wealth managers. The number of ultra HNHs

and debentures are medium risk whereas equities, currency,

is expected to more than triple over the next 5 years. The current

derivatives and hedge funds are generally perceived to be high risk.

period can be used by wealth managers to improve their networking,
develop more products suitable for the Indian market and identify

Due to the focus on capital preservation, most ultra HNIs like to retain

the right clients so that they will be ready to move when the market

close control over their assets and their portfolio management. This is

turns hot once again.

particularly true of assets that they comprehend, such as real estate,
derivatives, stocks and shares etc. On the other hand, they are likely
to take help from experts on assets that they did not understand;
it so happens that most of these assets in this category are also high
risk such as hedge funds, currency and art, and are therefore less
invested into.
The improvement in wealth was also reflected in contribution to
charity. After declining last year in percentage terms, contribution to
charity bounced back this year. The percentage of income that has
gone towards charity/philanthropic activity among India’s wealthy
has gone up (5.4 per cent in 2012 versus 4.4 per cent in 2011). Clearly,
the well-publicised drive by a globally renowned billionaire to get the
wealthy to donate substantially to charity appears to be getting
attention. One of the first in India to respond to this call was an IT czar,
who announced that he had already transferred a portion of his

SPECIAL FOCUS:
ESTATE PLANNING

SPECIAL FOCUS: ESTATE PLANNING
Estate planning is a process whereby a plan is created incorporating
an individual's wishes regarding his/her estate and which provides

WHAT IS ESTATE PLANNING?

for efficient management, preservation and creation of a legacy during
his/her lifetime and after.
Succession planning is getting increasingly complicated and it is
becoming extremely important to plan for preservation and manage-

Avoid property dispute

ment of one's estate. The primary goal of estate planning is to ensure
that the estate of the individual passes to the intended beneficiaries

Planning for future

at an opportune time, often including efficient tax and succession

5.5%

10.2%

12.7%

planning and avoiding or minimising court proceedings in succession
matters and obtaining probates.

Reduce Taxes /
Legal protection

In the United States, estate planning is a well-developed and widely

Plan / Manage
portfolio

12.6%
14.2%

used concept and most wealthy families have trusts as a part of their
overall estate and succession plan. In India, on the other hand, many

Safety for
dependents

wealthy families do not yet consider it as an integral part of their
planning and the concept of a professional trustee is still in its
nascent stage.

29.1%

This big difference in the approach to estate planning in both these
countries, where the ultra HNI population is substantive, can be
attributed to the existence of Estate Tax or Inheritance Tax in the U.S.

15.7%

Allocate property
to beneficiaries

Inheritance tax, which is prevalent in a number of countries around the
world, is a tax levied on the transfer by virtue of inheritance of the
taxable estate of an individual on his demise.
It is no surprise, therefore, that estate planning is taken very seriously
by the wealthy in the U.S. Some other countries that levy estate tax
or inheritance tax in various forms include UK, France, Germany, Italy,
Belgium and the Netherlands. In fact, many advanced countries levy
an inheritance tax or estate tax.



Don’t know

Australia, Russia and India are among a select group of nations that no

“We find it difficult to convince the ultra rich about estate planning as

longer levy estate tax. In India, estate tax was introduced in 1953 and

they are not comfortable with sharing personal and confidential

it continued for 32 years before its abolition in 1985.

information,” one professional estate planner remarked.

Even today, many of India’s wealthy do not even have a Will, which can

Many ultra HNIs understand that an efficient estate plan will ensure

lead to a number of issues at the time of succession of assets on the

smooth succession of their estate to their heirs after their demise,

demise of the individual. When questioned, most ultra HNIs admitted

protection against any possible disputes in the future and ensure that

to knowing what estate planning is, but we found that their familiarity,

requirements and needs of dependent and minor beneficiaries are

comfort and interaction with professional estate planners was low.

taken care of when they are not around. But quite a few of them do not
think that it is a very serious issue. One ultra HNI remarked: “Our family

IS ESTATE PLANNING NECESSARY?

structure is very linear. There is me, my father and my son. So, estate
planning is not of much importance for us.”
We found that his remarks were echoed across a large section of ultra
HNIs. “Ours is a nuclear family, my husband is a professional lawyer,
succession of my business is a non-issue. So questions of inheritance

78.5%

and related things do not bother us much. Whatever legal steps
are required are well managed by my husband. I think this (estate
planning) is more relevant with Hindu Undivided Families and
businesses,” another ultra HNI stated.
After being ignored for long, estate planning is now being considered
and discussed by many ultra HNIs, a lot more thanks to a number of
high profile cases involving family inheritance that have come in the
public domain in recent years. Many more Inheritors and Self-made

21.5%

are now seriously considering estate planning to ensure that their
family members do not have to face litigation or other delays for the
succession of their family assets and also to protect and ring-fence
their family assets.

Yes
No


But even when they decide to undertake estate planning, professional
wealth managers are not always the first port of call. The reason, put

HAVE YOU CREATED A PRIVATE TRUST?

simply, has to do with trust. Many of the traditionally wealthy families
(Inheritors and Self-made) continue to depend on their personal
confidants such as their family chartered accountants or family lawyers
for their estate planning needs because these individuals have their

71.4%

implicit and enduring trust.

ADVISORS ON ESTATE PLANNING
Lawyers
Financial Advisor / Banks
Chartered Accountants
Friends / Family
Own research

28.6%
Yes
No

Among the three categories, it is only the Professionals who admitted
in greater numbers that they had consulted their financial advisors on
8.0%

estate planning structures. But even among them, only 30 per cent
said that they had created a private trust for their family. While among
Inheritors and Self-made, only a small minority has discussed setting

15.1%

up a trust with their financial advisors and an even smaller number
has actually gone ahead and set up trusts.

17.2%

Estate planning can be taken care of by either Wills and/or trust

27.1%

structures. A Will is a legal declaration by which a person (the testator)

32.6%

names one or more people to manage his/her estate (executor) and
provides for the distribution of his property at his demise. On the other
hand, trust involves transferring of one's estate to a Trustee for the

“We have a lawyer who is as good as a family member since two

benefit of certain intended beneficiaries. A trust provides for manage-

generations. I do not think an estate planner would be needed as it is

ment of the estate during one's lifetime and also provides for distribu-

being already managed well,” one of our respondents said.

tion and management of one's wealth post demise.


Among those who have set up trusts, an overwhelming majority

also take care of an incapacity scenario as the settlor can also be a

(more than 3/4th) of Inheritors, Self-made and Professionals have

beneficiary of the trust. An irrevocable trust, on the other hand,

set up revocable trusts. A revocable trust is one where the settlor or

provides the added advantage of ring-fencing of assets, if structured

the creator of the trust has the right to revoke the assets transferred

appropriately. Private trusts can also be used to meet philanthropic

into the trust. Such trusts are very flexible and help in ensuring smooth

objectives.

transition of assets without any delays, disruptions or disputes. It can

ADVANTAGES OF ESTATE PLANNING

10.5%

25.9%

16.2%

23.7%

23.7%

Consolidation of assets
Taking care of dependent / minor beneficiaries
Preventing disputes in the family
Ease in succession
Protection and preservation of assets

The newer generation of ultra HNIs is certainly more amenable to professional estate planning, our survey indicates. Nearly 50 per cent of the
respondents under 30, for instance, said that they had held preliminary discussions on estate planning.
This is certainly an encouraging sign as it suggests a growing awareness about the need for estate planning among the wealthy in India.


EXPERIENCE WITH ESTATE PLANNING
Extremely satisfied
Satisfied
Not at all satisfied

42.9%
28.5%
.5

28
28.6%

Last year, there was a lot of public discussion and debate on the
reintroduction of an inheritance tax in India. At a time when the
government tax revenue is under strain, there is avid support for the
idea of inheritance tax from a number of economists, politicians and
other influential figures. Though when and whether this tax will be
reintroduced remains anybody’s guess, these discussions have led to
many families thinking seriously about trust structures.
Though the concept of estate planning is in its nascent stages, it is
quickly gaining importance in the minds of ultra HNIs largely because
of the growing awareness of the subject and its various advantages
and also because with changing times, there is a need to ensure
protection and ring-fencing of assets to ensure that the interests of
family members are protected in the future. Families are also more
open to appointing professional estate planners as their experience
and expertise on these matters will help their family take care of all
their needs in the most efficient manner.


Top of the Pyramid 2013

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

En vedette

En vedette (13)

Similaire à Top of the Pyramid 2013

Similaire à Top of the Pyramid 2013 (20)

Dernier

Dernier (20)

Top of the Pyramid 2013