What is Driving Demand for Luxury Real Estate in India?
India’s residential real estate segment has been going through a robust growth phase, as the demand for luxury real estate in India is rising. With 1,73,241 homes sold in the first half of 2024, the country’s housing sector registered record-breaking sales in the last 11 years, according to the latest Knight Frank report. The country’s luxury housing segment also witnessed impressive sales in H1 2024, with homes priced above Rs 1 crore accounting for 41% of total sales. This has given people reasons to invest in luxury real estate in Mumbai.
Another report released by CBRE shows that the sales of residences priced above Rs 4 crore experienced a significant 75% growth in 2023. This impressive uptick effectively doubled the market share of luxury homes within total property sales. This strong growth momentum is driven by positive housing sentiments and strong buyer confidence.
India’s Residential Real Estate– Shifting Towards Premiumisation
According to a recent ANAROCK report, India has tripled its luxury home sales share over the past five years. The growing allure of luxury homes across the country is smartly overtaking the affordable housing segment, which is currently experiencing a decline in sales.
Tier 1 cities such as Mumbai, Pune, Bengaluru, Delhi-NCR, Chennai, Hyderabad, and Kolkata are emerging as India’s luxury housing hotspots. According to ANAROCK, Bengaluru sold 3,455 units in the luxury housing segment in Q1 2024. Also, the city launched 5,632 luxury residential units in the first six months of 2024, reports Savills India.
Purva projects, like Orient Grand, Somerset House, Symphony, and Atmosphere, cater to the growing demand for luxury real estate in India. This demand is driven by a confluence of factors: a desire for spacious and high-quality living, a focus on wellness and lifestyle, and a shift towards premium amenities and experiences. The affluent Indian population is seeking exclusive communities with world-class facilities, offering a lifestyle that balances luxury, comfort, and a strong sense of community.
Mumbai topped the list with 9,360 units sold, followed by Chennai with 530 units. Likewise, according to CBRE South Asia’s ‘India Market Monitor Q1 2024’ report, Mumbai registered the highest luxury residential unit sales with a 15% YoY increase during the first quarter of 2024. As per the report, Pune also witnessed an almost fivefold (4.7x) increase in sales during the same period.
These impressive sales figures are driven by rapid urbanisation, favourable government regulations, increased high-income buyers, increased savings during the pandemic-induced lockdowns, and the growing affinity for bigger homes. India’s thriving luxury housing market has also attracted high-net-worth individuals (HNIs), ultrahigh-high-net-worth individuals (UHNIs), NRIs to invest in luxury real-estate investment in Bengaluru.
Evolving Aspirations of Homebuyers
New-age affluent home buyers look for residences that serve a dual purpose–a place to live and a high-value asset that mirrors their aspirations. Furthermore, many young, ambitious millennials consider buying luxury living spaces a mark of prestige and social status. This, in turn, is fuelling a surge in demand for luxury homes.
India Sotheby’s International Realty’s 2023 Luxury Outlook Survey highlights a growing interest in the luxury real estate market among HNWIs and UHNWIs. According to the survey, high-rise apartments lead the preference at 34%, followed closely by farmhouses and holiday homes at 30%. The survey further reveals a significant budget allocation towards luxury properties, with 65% targeting the Rs 4 crore to Rs 10 crore range and over 33% buyers seeking properties exceeding Rs 10 crore.
NRIs Driving Demand
India’s luxury housing sector is experiencing high demand from NRIs. The emotional attachment of NRIs to their homeland plays a key role in driving this demand. Additionally, this upswing can be attributed to factors such as the affordability of luxury homes in India compared to those in global cities and the urge to buy luxury homes back home as a retirement destination or to rent them out to generate impressive returns. Other motivations include diversifying investment portfolios, as real estate is a stable investment option. Also, real estate appreciates over time, providing a hedge against inflation.
Further, favourable Government policies, such as RERA, and relaxation in FDI have made the country’s real estate sector more transparent, accountable, and accessible, thus encouraging NRIs to invest in India’s luxury housing sector. Additionally, tax benefits on NRI home loans are another lucrative incentive for NRIs considering luxury housing investment in India.
Positive Sentiments Among Real Estate Developers
Homebuyers’ growing fascination with India’s luxury housing sector has built confidence among residential developers across India to create homes aligned with the tastes of NRIs, HNIs, and UHNIs. The growing demand for luxurious homes is encouraging developers to deliver customised, high-end living spaces to cater to the aspirations of these wealthy homebuyers.
Reports claim that the number of HNIs and UHNIs will triple by 2034. Additionally, approximately 80% of real estate developers expect NRIs to buy more homes in India in 2024, according to a CREDAI – Colliers Developer Sentiment Survey 2024.
Bengaluru and Mumbai Emerging as NRIs Luxury Property Hotspot
According to industry reports, 29% of NRIs prefer buying property in Bengaluru. The city’s pleasant climate, cosmopolitan lifestyle, thriving IT sector, tourist spots, and greenery make it a desirable place to live. When buying homes in Bengaluru, NRIs prefer ultra-luxury properties in posh residential areas/gated communities with smart features and high-end amenities that match their sophisticated lifestyles. Bengaluru caters to their needs with dream homes featuring everything they desire. On the other hand, Mumbai, known for its bustling lifestyle and Infrastructural growth, is preferred by 23% of NRIs.
Wrapping Up
India’s luxury real estate segment has transformed from a niche market into a mainstream asset class. Moreover, a substantial rise in new property launches in H1 2024 has driven optimism among buyers and developers. Analysts predict India’s real estate sector will probably reach 1 trillion by 2030. The sustained growth observed in India’s luxury housing segment suggests it will contribute significantly to this ambitious target.
