High-End Jewellery as a Financial Asset for HNIs

28 Nov 2024 , 01:51 PM

Gold, diamonds, and precious gems have always held a special significance in Indian culture and traditions. Beyond just adornments for special occasions, jewellery in India is seen as a store of wealth and a valuable asset to own.

Recently, wealth management managers have observed a growing trend among high-net-worth individuals (HNIs) and ultra-HNIs exploring luxury and bespoke jewellery as an alternative investment avenue. Its exclusivity, heirloom value, and potential for strong returns make it an attractive wealth diversification choice.

An Introduction to Investing in High-End Jewellery in India

Over the last decade, India has witnessed a significant surge in HNIs, positioning it among the world’s fastest-growing wealth markets. Most of these wealthy individuals have generated affluence from business ventures and investments.

While their primary assets remain concentrated in real estate and equities, allocation to alternative investments is rising rapidly. These include luxury collectables, artefacts, fine art, and jewellery.

According to industry estimates, the Indian jewellery market is expected to grow into a $100 billion industry by 2025. This presents a substantial growth opportunity for investors focusing on this space.
Wealth managers often advise Indian HNIs to use high-end and bespoke jewellery to bolster their investment portfolios beyond traditional assets. The key lies in evaluating pieces on rarity, craftsmanship, creator pedigree, gemstone quality, and prevailing luxury jewellery trends.

Additionally, personalised custom creations often see faster appreciation, given their exclusivity and individuality. Industry specialists recommend investing ₹35-50 lakhs and above to derive optimal value from these investments.

Key Advantages of Investing in Luxury Jewellery

This section covers the key advantages of investing in luxury jewellery. Here are the highlightable benefits:

• Inflation Hedge: Precious metals and rare gems usually surpass inflation across long investment horizons. Luxury jewellery can serve as an effective asset protection vehicle.
• Portability: Gold and diamonds hold high value in compact forms, allowing easy storage and global transportability. This makes them especially attractive to globetrotting HNIs.
• Wealth Preservation: Passing down unique jewellery pieces encapsulates a family’s heritage and facilitates wealth transfer to future generations.
• Safe Haven Appeal: During economic downturns, gold jewellery sees heightened demand from investors and consumers, boosting its defensive appeal.
• Limited Supply: The rarity and uniqueness of bespoke creations by celebrity jewellers drive up their market value.
• Customisation: Personalised jewellery with distinctive designs allows HNI investors to express their identity and style preferences through valuable jewellery assets.
• Market Growth: Rising Indian HNI wealth and increasing demand for luxury lifestyle products will continue expanding the domestic jewellery sector.

Choosing the Best High-End Jewellery Investment

Identifying pieces with characteristics that boost investment returns is critical to success. Here’s how one can choose high-end jewellery:

• Iconic Collections: Signature collections from repeated jewellery houses in India have an instantly recognisable design language that creates enduring appeal.
• Temple Jewelry: Collectors demand antique Indian jewellery inspired by heritage temple designs because of its craftsmanship and nostalgic significance.
• Rare Gemstones: Precious stones like Golconda diamonds, Kashmir sapphires, and Colombian emeralds in large-carat sizes can deliver substantial returns driven by scarcity.
• Modern Heirlooms: Contemporary pieces crafted using age-old techniques like kundan, polki, and meenakari make for great inheritance gifts of emotional and financial value.
• Bespoke Creations: One-of-a-kind personalised pieces made using exceptional materials by famous designers make excellent investment-worthy jewellery.

Best Practices for Investing in Indian Luxury Jewellery

This section covers the best practices for investing in luxury jewellery. Here are some points one can follow:

• Partner with reputable jewellers to source certified pieces.
• Work with specialised advisers to assemble a balanced collection catering to budgets and risk appetites.
• Opt for BIS-hallmarked gold jewellery and certified diamonds to ensure standardised quality and authenticity.
• Get jewellery valuations updated every 3-4 years from authorised gemological labs to quantify appreciation.
• Develop personalised plans focused on the intended holding timeframe and selling approach.

Closing Thoughts

For Indian HNIs aiming for differentiated returns and enduring legacy value, augmenting financial portfolios with high-end bespoke jewellery is a compelling proposition. While cognizant of the inherent risks, global prestige, emotional resonance, heirloom status, and return potential, luxury Indian jewellery can be expected to glitter brightly for discerning investors in the future.