Opportunities in Luxury Real Estate and Gold

With smarter and diverse portfolios, HNWIs are not only preserving wealth but also pursuing growth opportunities

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THE YEAR 2024 has been marked by a constantly shifting financial landscape.

Elections in various countries, persistent inflation, rising geopolitical tensions, and overvaluation in equity markets have prompted high net worth individuals (HNI) to broaden their horizons and diversify their portfolios.

As the market faces moderate growth prospects-with interest rate cuts largely factored in-HNIs are increasingly on the lookout for avenues that promise higher returns. Recent trends suggest a clear shift towards luxury real estate and gold, along with a growing interest in alternative investments.

According to a report by Capgemini, the share of alternative investments in HNI portfolios has risen to 15 per cent, up from 13 per cent in 2023.

Alternative investments encompass commodities, currencies, private equity, hedge funds, structured products, and digital assets. This reflects a broader strategy to mitigate risks associated with traditional equities and cash holdings, which have faced challenges in the current economic climate.

Additionally, fixed-income instruments have gained traction, now making up 20 per cent of HNI portfolios.

This shift is particularly evident among ultra-high-net-worth individuals (UHNIS), who are increasingly using bond strategies to hedge against inflation and preserve their wealth.

Real Estate

As of 2024, 19-20 per cent of HNIs' wealth is allocated to real estate, reflecting a sustained focus on physical assets.

Real estate is favoured for its tangible nature, stable income, steady returns, and intrinsic collateral value.