Real Estate Most Popular Asset Class: Report
The percentage at which individual wealth is growing in India is on the rise. According to the India Wealth Report 2018 released by Karvy Private Wealth, after witnessing a growth of 8.25 per cent in the financial year 2017 (FY’17), individual wealth in India has witnessed a 14 per cent rise in FY’18. At the end of FY’18, individual wealth in India stood at Rs 392 lakh crore as against Rs 344 lakh crore at the end of FY’17. Of this, the report suggests, financial assets contribute Rs 236 lakh crore while physical assets are worth Rs 156 lakh crore.
If individual wealth in the country keeps on growing at this pace, the numbers would double and reach Rs 762 lakh crore in the next five years (FY’23), the report says.
This wealth is being utilised to invest in some of the most popular asset class, including real estate, gold, mutual funds, direct equity, bonds, insurance, etc. Of all these assets, the highest gaining physical asset class has been real estate while direct equity has been the leading financial asset. Real estate has witnessed a year-on-year growth of 10.35 per cent, emerging as the best performing asset class. However, the report suggests that other assets are now strengthening their presence, too.
According to the report, financial assets are gaining popularity and are expected to grow at a CAGR of 16.99 per cent over the next five years as compared to 9.34 per cent CAGR for physical assets. The share of financial assets in individuals' wealth will increase to 67.98 per cent by FY’23 from 60.22 per cent in FY’18. However, the share of physical assets will reduce from 39.78 per cent to 32.022 per cent.
"Incrementally, more savings will go to financial assets than physical assets,'' said Karvy Private Wealth CEO Abhijit Bhave.