The luxury real estate market in India has witnessed an unprecedented surge in demand over the past two years. According to a 2023 CBRE report, sales of luxury homes in the first quarter of 2023 increased by an astounding 151% year-over-year. Proptech unicorn NoBroker also reported a notable uptick in demand for luxury real estate units in 2023, attributing it to increased disposable income and the allure of an enhanced lifestyle.
The sales of luxury real estate properties soared by 112% in the previous year compared to 2022.
The Appeal of Villas in Metro Cities
Among the various types of luxury real estate units, the appeal of owning a villa has intensified in major metro cities like Delhi-NCR, Mumbai-MMR, Hyderabad, and Bangalore. According to industry experts, there is a discernible shift in consumer preferences towards spacious and opulent living spaces.
Luxury realtor and social media content creator with over 260k followers on Instagram, Snehil Yadav says, “This shift is driven not only by High-Net-Worth Individuals (HNIs) and Ultra High Net Worth Individuals (UHNIs) but also by the upper and upper-middle class expanding their budgets to acquire larger and more premium apartments.”
Sarjapur and Devanahalli in Bangalore, Greater Noida, Noida, and Gurugram in Delhi-NCR, MMR in Mumbai, and Kollur, Tellapur, and Mokila in Hyderabad have emerged as hotbeds with the largest number of villa launches in a year. The demand for villas in Bangalore has witnessed a substantial 32% jump compared to pre-Covid years, followed by 25% in Delhi NCR, 30% in Mumbai, and 27% in Hyderabad.
Factors Driving Luxury Real Estate Demand
Several factors contribute to the growing demand for luxury real estate in India. Rising incomes, aspirational lifestyles, housing shortages, and population growth are key drivers. The expansion of the Indian economy and the introduction of various business models, such as technology, venture capital, social media, and start-ups, have created a new class of wealthy individuals with significant purchasing power. This demographic shift has significantly contributed to the increased demand for luxury housing.
Mumbai’s prime residential prices have increased by 6.5%, making it the fourth most expensive city in the world for housing. Bengaluru has also experienced a remarkable 142% increase in luxury real estate. Notably, for the first time in India, sales of high-end homes priced above Rs 1 crore have surpassed demand in the affordable segment, priced below Rs 50 lakh, according to a report by real estate consultancy Knight Frank.
Changing Market Dynamics
The “India Real Estate Q3 2023” report by Knight Frank highlighted that the number of homes sold in India during the quarter reached a six-year high, with a sale of 82,612 units, 12% higher than the previous year. Homes priced between Rs 50 lakh and Rs 1 crore accounted for a market share of 36%, with Bengaluru, Pune, and Mumbai collectively contributing 60% of sales in this price bracket.
Homes priced above Rs 1 crore held a 35% market share, witnessing a significant surge in luxury real estate demand, with sales jumping 39% quarter-on-quarter to 28,642 units. Region-wise, the National Capital Region (NCR) recorded the highest sales in this category, followed by Mumbai and Bengaluru. In contrast, the affordable segment, homes priced below Rs 50 lakh, saw a decline in market share to 29%, down from 36% the previous year.
Shifting Preferences: Luxury Over Affordability
This shift towards higher-value properties indicates a significant change in the market dynamics. The report noted that elevated interest rates and rising prices have had little impact on higher-ticket-size homebuyers. However, the affordable segment has been severely affected, necessitating interventions to stimulate demand and improve development viability.
The decline in the affordable housing segment is concerning, given its historical significance as the largest buying segment and its crucial role in long-term industry growth. Economic turbulence in recent quarters has impacted lower-income consumers, affecting areas like rural consumption and the lower end of passenger vehicle sales.
Luxury Living: Reasons and Benefits
The growing trend of buying luxury real estate is observed predominantly in metros and major cities, driven by changing demographics and improving aspirations of buyers. Opting for a luxury house or villa comes with not only high-class facilities but also several intangible benefits.
Comfort
Modern amenities such as swimming pools, meditation centers, landscaped gardens, gyms, and manicured lawns are standard features in luxury real estate in India. These homes are tailored to match the class and expectations of today’s discerning buyers.
Status Aspiration
Buying a luxury home from esteemed real estate companies like BramhaCorp signifies buying prestige. Luxury homes in India offer an impeccable standard of pride and joy, providing a lifestyle that goes beyond a mere postal address.
Security
Security is a crucial aspect of luxury homes today. These properties come with top-of-the-line security, including trained personnel and installations. The security techniques and equipment used are of the highest standard, ensuring residents’ safety.
Technological Comfort
High-end luxury homes, such as F- Residences, offer an extraordinary living experience with technologically advanced innovations. Features like remote-controlled window shutters, solar generators, and centrally air-conditioned rooms cater to the high standards of luxury homebuyers.
Good Neighbors
Beyond amenities, factors like having a good neighbors group influence the buying decision for luxury homes. Many prefer reputed housing projects to provide a better surrounding and like-minded friend circle for their children, emphasizing the role of the neighborhood in the decision-making process.
Investment Value
Luxury properties are considered a high-return investment, aligning with the traditional investment pockets of real estate and gold. The return on investment is high, making luxury property a performing asset that serves a practical purpose while gaining in value.
Mumbai: A Hub for Luxury Housing
The Indian real estate sector has undergone a significant transformation, with luxury housing emerging as a notable segment. Mumbai, often referred to as the financial capital of India, stands out as a hub for luxury housing development among major Indian cities. The growth outlook for luxury housing in Mumbai and India at large highlights the factors driving the demand for opulent residences.
The rise in luxury real estate purchases in India, evident over the past two years, is poised to continue into 2024. The increasing demand for spacious and opulent living spaces, driven by rising incomes, changing demographics, and evolving aspirations, has reshaped the dynamics of the Indian real estate market.
The shift towards higher-value properties, particularly in the luxury segment, highlights a changing landscape where buyers prioritize comfort, status, security, technological advancements, good neighbors, and investment value. As the luxury housing market thrives, developers and investors are capitalizing on this trend, shaping the future of real estate in India.