INDIANS GET FLASH WITH THE CASH.
When it comes to investment, Indians in particular have a soft spot for tangible assets AKA passion investments that come under the category of alternative investments such as gold, jewellery, gems, watches, vintage cars, art and luxury collectibles.
This weakness for the finer things in life is being increasingly indulged (and flaunted) thanks to wealth per adult Indian more than doubling in the 10 years from 2000 to 2010, from INR 88,973 ($2,000) to INR 2,17,985 ($4,900), according to the Global Wealth Report by Credit Suisse.
THE NUMBER OF INDIANS WHO HAVE FINANCIAL ASSETS OF OVER $1 MILLION, EXCLUDING MAIN RESIDENCES, NOW STANDS AT 127,000
Similarly, according to the 2010 World Wealth Report by Capgemini and Merrill Lynch Wealth Management, the number of Indians with financial assets of over $1 million, excluding main residences, now stands at 127,000. And, according to Forbes magazine, India gave birth to 17 new billionaires in 2010, and has 69 billionaires worldwide.
This news has excited those in private jet making industry. Companies like Gulfstream and Embraer are concentration their focus on the wealthy Indian market and it would appear Indian billionaires are happy to be wooed if the country's richest man, Mukesh Ambani, is any example. Ambani bought his wife a $60 million Airbus complete with entertainment cabins and showers for her birthday.
LOVE OF GOLD
The 2010 World Wealth Report also states that Indians preference for investing more in tangible assets such as gold and luxury collectibles seems to reflect a wariness of sophisticated financial instruments as well as a more conservative approach to investment strategies. However it could also be attributed to a lack of investment options. Whatever the reasons though, there's no getting away from the Indian love of gold. Be it jewellery, bars and coins or luxury purchases - gold is one of the favourite investment avenues.
"Indians have a strong affinity towards jewellery, especially gold," says CEO of Karvy Private Wealth, Hrishikesh Parandekar.
The boom in India has triggered a new era of conspicuous consumption. Suddenly, being rich isn't enough, newly wealthy Indians are crowing about their new quality of life from the rooftops with flashy cars, houses, jewellery, designer clothing and accessories brands, luxury food and more.
Sales of prestige cars such as Mercedes and Ferraris rose 80 percent last year, despite punishing 100 per cent duties and pot-holed roads.
"Last year was phenomenal," says BMW India president Andreas Schf re sales. Aston Martin has also joined the list of luxury brands racing into India with plans to sell three models, namely the V8 Vantage priced at $350,000, the Rapide at $480,000 and the One-77 at $4.5 million.
SOME 42 PER CENT OF INDIANS, OR 455 MILLION PEOPLE, LIVE ON LESS THAN $1.25 A DAY, ACCORDING TO THE WORLD BANK
Given this frenzied spending on luxury items, it's sometimes easy to forget that India is home to the world's largest number of people living in poverty. Some 42 percent of Indians, or 455 million people, live on less than $1.25 a day, according to the World Bank and India's statistics on health, infant mortality and malnutrition are worse than those for some countries in sub-Saharan Africa. This new ostentation among the country's wealthier is highlighting the rapidly-growing gap between rich and poor and even Prime Minister Manmohan Singh has called for the rich to tone down their excesses and to "eschew conspicuous consumption".
Nobody seems to be listening though. The Indian luxury market as a whole is forecast to triple to $15 billion by 2015 from $4.76 billion at present, according to global consultancy AT Kearney.
HNWIS IN INDIA
Highlights from the Asia-Pacific Wealth Report 2010 by Capgemini and Merrill Lynch Global Wealth Management.
In India, the HNWI population and its wealth grew 50.9 per cent and 53.8 per cent respectively in 2009, more than recouping the losses of 2008, with resurgent stocks helping to drive the recovery. India's stock-market capitalisation more than doubled in 2009 after dropping 64.1 per cent in 2008. Importantly, though, HNWI wealth was also driven in India by the strength in the underlying economy, which grew 6.8 per cent in 2009.
The HNWI populations of Hong Kong and India experienced the strongest growth in numbers and wealth in the world in 2009, but those gains had followed the world's largest declines in 2008. In India, the HNWI population and its wealth fully recovered to pre-crisis levels, but in Hong Kong, the number of HNWIs at the end of 2009 was still only 79 per cent of the number at the end of 2007.
India's growth is expected to keep accelerating, with GDP forecast to expand 8.1 per cent in 2011 after a gain of 7.8 per cent in 2010, due to the significant expansion of private consumption and investment. In fact, its central bank, the Reserve Bank of India (RBI), is expected to tighten monetary policy progressively in 2010 to make sure its economy does not overheat as the global financial crisis recedes.
2012 CPI Financial. All rights reserved. 2011 CPI Financial. All rights reserved.
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