India continues to remain a key equity investment destination for wealthy non-resident Indians (NRIs) in the Gulf, even as they increasingly diversify their portfolios into global liquid assets, private equity and international markets, a report has said.
According to an analysis by Khaleej Times, the shift marks a significant change in the investment strategies of affluent Indian expatriates in the Gulf, whose wealth has traditionally been concentrated in family-owned businesses and real estate.
Citing management firm Julius Baer, the report noted, “Dubai-based NRIs are majority first-generation wealth creators. A lot of wealth has traditionally gone back into businesses and growing them. What came later was allocation to real estate, which then became one of the biggest asset classes on their balance sheet.”
Recent market volatility and succession planning are prompting wealthy families to reassess their long-term asset allocation strategies, it added.
“What we do see with the current situation is that everybody is looking at a pause, a reset and a reflection of how asset allocation will play out in the mid-term. Diversification is a clear trend. I would not say away from where they are, but more into liquid global markets,” according to the report.
The trend is being driven increasingly by the next generation of wealthy Indian families, many of whom prefer globally diversified and liquid investment portfolios over traditional fixed assets.
Despite the growing appetite for overseas investments, India continues to occupy a central place in NRI portfolios.
It further highlighted that India is a very equity-heavy market. The allocation to Indian debt is very minimal. It remains largely an equity-driven theme.
After a period of caution triggered by rupee depreciation and global macroeconomic uncertainty, interest in Indian assets is beginning to recover, supported by a robust pipeline of initial public offerings (IPOs), according to the report.
Beyond listed equities, affluent NRIs are increasingly allocating capital to private equity, venture capital funds and real estate investment trusts (REITs) to participate in India’s long-term growth story.
A lot of equity release from old family businesses is taking place. This has created a lot of liquidity in the Indian market, the report said.
While some of this liquidity is being deployed into global markets for diversification, Sumaya stressed that India remains an important part of long-term wealth allocation strategies.
