INDIA'S ESTIMATED STOCK market capitalisation at $5 trillion in 2024 will be the fifth-largest in the world. According to Knight Frank Wealth Report 2022, the number of ultra high-net worth individuals (UHNIs) is likely to rise 63% to 11,198 by 2025. The number of billionaires will increase. So, where should UHNIs invest? The answer lies in stocks, equities, assets, and real estate.
"Indian HNIs are investing massively in equity — our demat accounts are at their highest — and the rest of the world is not doing what the Indian stock market is doing," says Delhi-based Safir Anand, a prominent IPR lawyer, angel investor and brand strategist.
Thanks to the pandemic, home improvement (such as art, décor, carpets, or even wine and whisky collection) and personal improvement (jewellery and watches) are going up as a result of revenge buying. Those putting their money in real estate want independent homes, sometimes even in Dubai or the U.S. to mitigate risks.
Revenge spending has, in fact, created a scarcity of luxury items. There is a scarcity premium attached to the Rolex (it's impossible to go to a showroom and pick up a GMT-Master II; there is a year-long waiting list), as it is to the Birkin bag by Hermès (with its infamous waiting 'list').
New York, New York!
While UHNIs turned to the domestic market during the pandemic to purchase bungalows in Goa, or niche locales like Lutyens Delhi or Jor Bagh, in 2023, they are looking abroad. "Already $19.61 billion has been sent out of the country in 2022, up 54% from FY21," says Akash Puri, director, international, India Sotheby's International Realty. "This is being utilised for travel, real estate investments, and student education. There's an uptick in demand for property in 'gateway' cities, such as New York, Miami, London and Dubai."
Luxury apartments like a three-bedroom in Central Park South, New York, goes for a cool $12 million. "$750,000-1 million can give you a nice one-bedroom condo in the secondary market in Manhattan, with a concierge, gym, doorman facility," says Puri. You can rent it then, which is a long-term investment.
"With a $5,000 average rental, you're getting $60,000 a year just as rental," he adds. "It's the same with London."
Miami is another hot destination because a lot of start-ups, Wall Street, and fund managers have relocated there after the pandemic. "It has sunny weather, is tax-friendly and the new corporate residence of companies like Blackstone, Starwood Capital, Goldman Sachs, and Elliott Management," says Puri. Sotheby's International Realty has properties like a four-bedroom Brickell Avenue, Miami mansion with ocean views for $7,490,000 for sale.
But the top destination is Dubai. It's not just Mukesh Ambani with his $80 million villa in the Palm Jumeirah who's buying properties there — Indians are attracted by Dubai's Golden Visa programme. "If you invest AED 2 million (via the LRS route), you will get this Golden Visa, for you and your entire family (children up to 25 years) for 10 years, after which you become a tax resident," says Puri. "$2 billion of real estate was sold in the week ending September 2."
Greece is also attractive. "A €250,000 investment in a property gives you immediate residency, which may be converted into a passport eventually," says Puri. "Rental yields are between 5-7%, and because Greece is a holiday destination, so an apartment on a high tourist footfall island is a good option," he adds.
High On Wine
Wine and champagne top the list of 'objects of desire', with a 16% growth over last year, and 137% over a 10-year period, according to the Knight Frank Wealth Report 2022, with champagne (+31%) and burgundy (+25%) topping the list. "Like all luxury goods, rarity is an important factor," says Stockholm and London-based Cecilia Oldne, partner for India at Amphora Portfolio Management, a UK-based fine wine investment firm. "Wine gets more desirable over the years — a 'fine wine' can take 10 or even 20 years to reach its drinking window. Also, fine wines get rarer with time — each time a cork is pulled, that wine becomes rarer."
But wines can sometimes be hard to sell, says Oldne. "For a newcomer to wine investment, it's best to stick to geographical regions that are straightforward to sell," she adds. "This means grand cru classe Bordeaux, Grand Cru Burgundy, Super Tuscans from Italy, and a few new world wines from California. Avoid seeking out the 'next big thing'."
Domaine de la Romanée-Conti (DRC) is the most expensive wine in the world (it produces only 6,000-8,000 cases a year, only from grand cru vineyards in Burgundy, France). A lot of three bottles from the 2002 vintage went up for sale at Christie's, with an estimate of $55,000-85,000. "The trick is to find estates or vintages that are good value compared to their peers. For Burgundy, domaines such as Ponsot or Lambrays could be the hot tickets for coming years. For Bordeaux, consider Montrose, Cos d'Estournel and Ducru Beaucailou," says Oldne.
For short-term growth, go for vintages that appear to be trading at a discount to the critically acclaimed ones. "Currently in Bordeaux, the 2012 and 2014 vintages appear to be trading too cheaply, and it is very reasonable to expect a rally," says Oldne. For the long term, stick to the big blue-chip wines with high critical scores. A case of Château Latour 2010, for example, can be considered a pension wine.
Market conditions influence wine performance, but in the short term, i.e., 12 months in this case, Oldne has seen close to 20% growth in her clients' portfolios, due to changing consumer habits post-Covid. "We aim for a minimum of 15% return on investment year on year," she adds.
Time Will Tell
Watches grew at 12% since the year before, as per the Knight Frank Luxury Investment Index (Q4, 2021) — 108% growth since a decade ago. The most coveted watches in the world are made by Rolex, Patek Philippe, and Audemars Piguet. The Rolex GMT-Master II, the 'Batman' in blue and black, would have cost $8,000 two years ago. Today, it sells for over $14,000. The Stainless Steel Rolex Daytona, which continues to increase in value, followed by the Rolex Submariner and Rolex Explorer, are also impossible to find in boutiques, and enjoy 11-50% increases in a year, in the secondary market. The Rolex Daytona in steel, which sold for $15,000 two-three years ago, now sells for $35,000, if one is able to find it. Similarly, the Rolex GMT-Master II, the 'Pespi' watch in red and blue, retailing at $10,000, now sells for $25,000.
Patek Philippe's Nautilus 5711 in stainless steel, jumped six times its retail price this year — it reached its peak price of $233,000 in February, and it's now discontinued. The Audemars Piguet Royal Oak Jumbo in stainless steel was selling at its apogee at $164,000 in March, with prices slightly down today (due to the crypto crash), compared to its $30,000 retail price, according to WatchPro.
At Christie's latest auction, watch sales topped £420 million worldwide, a 54% increase from last year. "Patek Philippe and Rolex make up more than 80% of sales," says Nitin Nair, associate specialist, watch department, Christie's. "But not every Patek Philippe or Rolex is a guaranteed investment. You need to look at the watch’s condition, rarity, and provenance."
What makes a Rolex so desirable? "No other watch brand makes as many watches, at that level of quality," says Nair. "Demand outstrips supply, and hence most Rolex watches (especially the steel GMT-Master II, Daytona, and Submariner) command premium prices. Rolex built its reputation with 'tool watches' — built for specific functions — and original references to these watches tend to be the most sought after.
Even independent watchmakers have come into their own, according to the Knight Frank report. "The F.P. Journe is probably the only other brand apart from Rolex and Patek Philippe that tends to breach the million-dollar mark at the auctions. Within F.P. Journe, look for early examples from his subscription series or early production models which featured brass movements," says Nair. As for the advantage of investing in a Patek Philippe, it's because "prices of rare vintage Patek Philippe models are generally immune to market fluctuations," he adds.
The Art Of The Sell
One of the most popular investments for the home remains art, having grown 13% over the last year as per the Knight Frank Luxury Investment Index (Q4, 2021), and 75% over 10 years. M.F. Husain, S.H. Raza, and V.S. Gaitonde lead the pack. "They were instrumental in forming a unique identity for modern Indian art," says Siddhant Shetty, vice president, business strategy and operations, AstaGuru, a Mumbai-based auction house.
Unsurprisingly, the Masters often fetch astronomical prices — case in point, the 5 ft-plus Tyeb Mehta AstaGuru recently sold for an eye-watering ₹25 crore. "This oil on canvas painting, made in 1973, is from the artist's Diagonal series, and has appeared in an auction for the first time," says Shetty.
The Masters will appreciate over the years. The trick is to hold on to them for the long term, feels Tarun Khanna, Delhi-based art collector and founder, 108 Art Projects, an art advisory. "If you are buying the right names, sometimes a single piece can fund a child's college education," says Khanna. If the economy is prosperous, more and more works can go out of circulation, and valuation only comes in the long term (you end up giving up on short-term gains by paying premiums to auction houses). But artists like Gaitonde, who are at the top end, can see the value of their works jump by 25% in just three-five years. One of the largest collectors of the works of the late Prabhakar Barwe, Khanna has seen prices go from ₹50 lakh for an artwork to ₹3.5-5 crore today. "Soon, a Prabahakar Barwe will fetch $1 million," says Khanna.
It also makes sense to hang on to contemporary masters like Arpita Singh, who is now 85. "In five years the value of an Arpita Singh is likely to double," says Khanna. The same goes for a Krishen Khanna, or a Manjit Bawa, he adds.
Those artists who are highly experimentative, are also finding their way into auction houses, and into the homes of collectors, says Shetty of AstaGuru. For example, AstaGuru's latest sale included works by artists like Anish Kapoor (whose works are part of prestigious collections globally, and who is known for his public installation such as Cloud Gate at Chicago's Millennium Park and ArcelorMittal Orbit at London's Olympic Park), and Natraj Sharma. Similarly, M.V. Dhurandhar's 100-year-old 3-foot oil on canvas work, that captures the most critical moment of the Mahabharata — the Draupadi Vastraharan, sold in the AstaGuru sale for over ₹4 crore.
"The next big thing is women artists like Arpita Singh, Meera Mukherjee, and Pushpa Kumari, a Madhubani artist from Bihar," adds Khanna.
The Magic Carpet Ride
Among collectibles, antique, hand-knotted rugs are some of the most sought-after items in the world — with Chinese, Persian, and Mughal carpets leading the way. "We are seeing an unprecedented demand for masterpiece classical carpets," says Louise Broadhurst, Christie's carpet specialist. The Mughal carpets — made in India, are perhaps some of the rarest finds. Case in point, the forthcoming sale of a Royal Mughal pashmina carpet by Christie's, woven for the court of the Indian Emperor Shah Jahan, circa 1650, estimated at £2.5-3.5 million.
Polonaise carpets are another find, and the more colourful, the better. These were produced in the weaving ateliers of Isfahan during the reign of Shah 'Abbas I (1587-1629). "Most 'Polonaise' carpets were woven in brightly coloured silks on a cotton warp and silk weft foundation and incorporated gold and, or silver metal-thread which would have made their appearance both dazzling and brilliant." Christie's broke records in May 2019 when it sold two 'Polonaise' silk and metal-thread rugs, each for over £3.5 million.
And Chinese carpets — especially Ming — can be the biggest find. "There was an Imperial Ming dynasty 'Dragon' carpet, probably woven in Beijing in the 16th Century, which sold in Christie's Exceptional sale, 23 November Paris, 2021," says Broadhurst. "It was a rare example of a throne dais (kang) carpet, and had survived in exceptional condition. It was an iconic masterpiece, one of the only six surviving complete throne carpets." Estimated €3.5–4.5 million, this 'rare' carpet was bought by an Asian private bidder at Christie's in Paris for almost $7.75 million, a world record price at auction for a Chinese carpet and also the third-highest sum ever paid in public for an antique carpet of any kind, only surpassed by two very famous classical Kerman carpets.
The Jewel In The Crown
What glitters can often be gold in the bank. And jewellery that is of European design and heritage, such as Art Deco pieces, or signed jewellery by leading jewellery houses can be considered stable investments. "Renowned jewellery makers had some unique periods, highly sought after by international collectors, for example when Schlumberger worked for Tiffany, or the Tutti Frutti (multicoloured) period for Cartier," says Rahul Kadakia, New York-based international head of jewellery, Christie's. "Some of the many makers that enjoy a strong following include Cartier, Van Cleef & Arpels, Harry Winston, Belperron, Boucheron, Bulgari, Chaumet, Schlumberger, Tiffany, Webb and Yard. Contemporary pieces from designers such as Viren Bhagat, Wallace Chan, Edmond Chin and Joel Arthur Rosenthal (JAR) fetch considerable sums at auction."
Take jewellery maker like JAR for example. "JAR pieces cannot be purchased at any store," says Kadakia. "JAR only creates a small number of pieces per year, for selected clients only," says Kadakia.
And if you look at niche jewellery makers like Belperron, Vever, and Freres, they have a cult following, and are highly sought after. "The quality and craftsmanship of their designs mean that their jewels will stand the test of time, particularly iconic vintage designs," adds Kadakia. "Generally, the Art Deco period generates the most interest, followed by Belle Epoque, Retro Period, Art Nouveau and Arts and Crafts."
Art Deco jewellery is popular in India — as it was favoured among royal families. Jewellery collections of royal families of Patiala and Baroda have featured several Art Deco pieces, and so when a vintage Art Deco does pop up at auction, it garners eyeballs. "The quality of the diamonds and the rubies is fabulous," says Jay Sagar, jewellery expert, AstaGuru auction house.
The returns for Art Deco are high. "In 2018 we had an Art Deco diamond and emerald necklace that sold for ₹32.59 lakh," says Sagar of AstaGuru. "Today that is worth ₹45 lakh, nearly 40% rise in four years!" It's always fine gemstones like old European cut diamonds, Burmese rubies, emeralds and natural pearls that appreciate in value and continue to do so. "Coloured stones like rubies and emeralds have nearly doubled in value since 2018," adds Sagar.
Some of the most high-value stones are diamonds from Golconda mines (today, they come from Botswana, South Africa, Russia, and Canada); emeralds from Colombian mines, and Zambia; rubies from Myanmar and Mozambique; and Basra pearls from Bahrain.
If it's diamonds that catch your fancy, it's wise to buy red or pink diamonds, which are difficult to come by (blue is the rarest of all). The 18.18 carat Fortune Pink, the largest pear-shaped fancy vivid pink diamond to ever go under the hammer recently went up during a Christie's auction for an estimated at $25-35 million. And if the Fortune Pink is out of reach for most, for the reason of uniqueness (and price!) alone, HNIs can build a collection of jewels based on some of their famous past owners. From actresses like Liz Taylor to royals, auction houses have seen resplendent pieces that have been snapped up by collectors. "When the Ellen Barkin jewels were sold on October 10, 2006, three pieces broke the $1 million threshold," says Kadakia of the '90s Hollywood star's collection. Cartier, too, designed pieces that have featured in the collections of the Duchess of Windsor and actress Barbara Hutton. "Cartier's Tutti Frutti pieces, created in the 1930s and inspired by the cuts of Indian stones, are particularly coveted. Specific-signed jewels by Cartier which have achieved record prices include a Belle Epoque devant-de-corsage brooch by Cartier, which in 2014 achieved $17.4 million and became the most expensive signed jewel ever auctioned," says Kadakia.
Another maison whose pieces continue to rake in high prices, is Bulgari. "The Serpenti watch bracelets are signature pieces by Bulgari, and fetch very high prices at auction," says Kadakia. "But what collectors are really looking at, are signed pieces by Bulgari from the 1960s and 1970s. The pieces to look out for are early mystery set pieces by Van Cleef & Arpels, Belle Epoque pieces by Boucheron, Tutti Frutti by Cartier, and tiaras by Fabergé, or then exceptional diamond pieces signed by Harry Winston or Laurence Graff, known as the King of Diamonds," he says.
The value of rare whisky casks grew 428% over a decade, according to the Frank Knight Wealth Report 2022. Whisky is the perfect way to diversify one's portfolio, as it's a tangible asset, and "whisky casks will always have an intrinsic value, they can be bottled and sold no matter what happens in the economy", according to Braeburn Whisky, a UK-based financial advisory for whisky cask investors.
Returns on whisky cask investments have averaged 12.4% growth per year over the past 10 years, says Braeburn Whisky in its latest market guide. Unlike investing in whisky bottles (where the whisky has stopped aging), in whisky casks, the spirit continues to mature, and the seller can choose when to bottle the whiskies — with high prices expected for those that age the longest.
Which are the best casks to invest in? "The Macallan will always be at the top of the wish list, just because of their name and reputation," says Gurugram-based photographer Ajit Rana, who's invested in a few casks. Known as the 'Rolls-Royce' of single malts, this Speyside distillery (owned by Edrington) consistently sells at record prices at auctions, with a projected capital growth of 14-18% (as per Braeburn Whisky's market guide).
The Caol Ila (owned by Diageo), which goes into the Johnnie Walker blends, is the largest producer on Islay in Scotland, and is becoming the favourite single malt of Islay by connoisseurs the world over. "A cask bought for £14,000, can't really be bottled before it turns 10," says Rana. The annual return on the cask will be 12.5-15%, if you sell it after 15-18 years. After 18 years, it becomes 15-17%." Another good single malt to invest in is Bowmore (owned by Beam Suntory), and is famous for premium expressions that have aged for an extraordinary amount of time, and which fetches high prices at auctions. Projected capital growth for a Bowmore cask is 10-14%, as per Braeburn Whisky.
But the real trick is to mature the cask that you own, as long as you wish before selling it on the secondary market, where you get unprecedented returns. So suppose you purchase a cask of Glen Moray (filled in 2015 and aged in an ex-bourbon cask) for £3,000, today it's seven years old (at 12 years, it can be transferred to a sherry cask, where it will acquire new flavours, and kept in a distillery in Scotland). By the time 2039 rolls around, the cask will be worth £30,000.
And The Macallan? "A 30-year-old cask can go for as much as £200,000, something that is extremely rare to find," says Rana. Let's raise a toast to that.