Why UHNI and HNI Preferred South Delhi?

The meaning of rich is subjective. To make it objective, financial services sector classifies the rich as affluent, high net worth individual (HNI) and ultra HNI (UHNI). The usual practice is to classify based on the investor’s net worth. But the definition of a UHNI’s net worth differs from firm to firm. For instance, real estate consultant Knight Frank defines a UHNI as someone with an investible surplus (excluding real estate) of $30 million-plus (about Rs180 crore). Capgemini and Royal Bank of Canada define UHNIs as those with investible assets of $30 million or more, excluding primary residence, collectibles, consumables and consumer durables. Yet another definition, one that Kotak Wealth Management and Motilal Oswal Wealth Management consider, is a household with net worth of over Rs.25 crore.

The meaning of rich is subjective. To make it objective, financial services sector classifies the rich as affluent, high net worth individual (HNI) and ultra HNI (UHNI). The usual practice is to classify based on the investor’s net worth. But the definition of a UHNI’s net worth differs from firm to firm. For instance, real estate consultant Knight Frank defines a UHNI as someone with an investible surplus (excluding real estate) of $30 million-plus (about Rs180 crore). Capgemini and Royal Bank of Canada define UHNIs as those with investible assets of $30 million or more, excluding primary residence, collectibles, consumables and consumer durables. Yet another definition, one that Kotak Wealth Management and Motilal Oswal Wealth Management consider, is a household with net worth of over Rs.25 crore.

The reason behind the variations is that only a few people in India have an investible surplus of $30 million and above, minus residential property. “In India, if you want to classify the UHNI as those with an investible surplus of more than $30 million, you will only find 1,500-1,600 such individuals. This is a very small number for wealth management companies and banks to do business. Hence, they have to increase the customer base and are willing to consider even those people as UHNIs who have lesser amount as investible surplus,” said Samantak Das, chief economist and director-research and advisory services, Knight Frank India.

The number of UHNIs with an investible surplus of Rs25 crore is estimated at 117,000, according to a Kotak Wealth report. “The financial sector will be more than happy to service 117,000 people as against a mere 1,500. Some banks are even happy to work with customers with over Rs5 crore. Most of the data that we have in India around UHNIs is only an estimated number since each financial services firm uses a different sample,” said Das.

There isn’t enough data to measure wealth either. “Researchers and policymakers rely on consumption expenditure data collected by the National Sample Survey Organisation,” said Sripad Motiram, economist, Indira Gandhi Institute of Development Research.

Where are they making money?

study by Michael Walton and Aditi Gandhi, published in the Economic and Political Weekly in 2012, found that out of India’s 46 billionaires in 2012, 20 had drawn their primary source of wealth (at least originally) from sectors that can be classified as “rent-thick” (real estate, infrastructure or ports, cement and mining). The remaining 26 had drawn their primary source of wealth from “other” sectors (information technology, or IT/software, pharmaceuticals and biotechnology, finance, liquor and so on). As for self-made billionaires, according to Forbes 2014 rich list, they made money from IT and pharmaceutical sectors.

Apart from the trend of sectors such as technology, finance and pharmaceuticals yielding new billionaires, another trend that can be gauged is that there has been a shift from inheritors to entrepreneurs and professionals in the past two decades. The source of wealth for the first-generation rich entrepreneur is mostly business income, and for professionals, it is money from work benefits.

How difficult is creating wealth?

In India there is huge inequality in income; therefore, it is not surprising to see wealth creation in certain pockets. Nonetheless, it is the best time to create wealth. “If you have an idea and passion, there is ready capital. There are enough angel investors and venture capitalists,” said Abizer Diwanji, partner and national leader-financial services, EY.

Whatever be the benchmark, the first step towards reaching that level is to make a start. If you have an idea you, bring it out.

Enquiry Now

Go to Top