Elite's passion investments: Ultra-high net worth individuals (UHNWIs) in India exhibited a robust appetite for passion investments in the year 2023, dedicating a 17 per cent of their wealth to such assets, according to a Knight Frank report. The investment behaviours of India's elite, has shifted towards non-traditional investment avenues.

Art emerged as the top choice amongst Indian UHNWIs, with prices increasing by 11 per cent over the year. This trend is driven by the pleasure of owning prized assets, which is the main reason for investing in passion items among these discerning individuals. Luxury watches closely follow as the most coveted investment category, with jewellery rounding up the top three preferences amongst Indian UHNWIs.

Shishir Baijal, Chairperson & Managing Director of Knight Frank India, observes this trend as reflective of the evolving investment strategies of India's affluent class.  "With both domestic and global markets offering significantly higher returns for such items, India's ultra-wealthy are actively pursuing investment opportunities in areas aligned with their passions," he said.

Global passion preferences

On a global scale also, the super-rich prioritise passion investments, with art being the top choice. However, differences in preferences are apparent, with classic cars and luxury watches occupying prominent positions in the global investment landscape.

 

Despite high sales, the Knight Frank Luxury Investment Index (KFLII) shows a mixed picture. Although art saw an 11 per cent price increase in 2023, the overall index declined slightly by 1 per cent. Some assets experienced losses or minimal gains, indicating market adjustments. Andrew Shirley, editor of the KFLII, highlights the mixed performance, saying, "While it seems like a good year for luxury investments, the KFLII paints a less positive picture." He attributes losses to market adjustments rather than asset weaknesses.

Andrew Shirley, editor of the Knight Frank Luxury Investment Index, acknowledges the mixed performance. "It sounds like a bumper year for luxury investments, however the KFLII reveals a less positive picture," he said. He attributes some of the losses to market adjustments rather than inherent weakness in the assets.

Resilient investment returns

The full results of the Knight Frank Luxury Investment Index for 2023 underscore the resilience of certain assets over the long term. Despite short-term fluctuations, rare whisky stands out with a substantial 280 per cent return over a decade, reaffirming its status as a premium investment choice.

 

As India's wealth continues to grow, fuelled by economic expansion and changing demographics, the trajectory of passion investments amongst its ultra-wealthy population is poised for further evolution.