The year 2022 has witnessed a phenomenal growth in the Luxury Real Estate market; the ascending figures are more than that of the last three years. This segment singularly generated 12% of overall sales in the first quarter of 2022, up from 7% in the first quarter of 2019 as per Industry figures. Indian HNIs and NRIs are playing a substantial role in the spurt being witnessed by this niche segment of the real estate offerings. A cogent data point is that affordable housing, ticket size of 40 lakhs and below, fell to 31 per cent in the first six months of 2022 from 38 per cent in full 2019. It has been notably afflicted due to the pandemic, as this buyer segment bore the maximum financial aftermath. The middle class faced loss of livelihood and salary cuts and hence their demand for homes took a negative impact.
The HNIs on the other hand were secure financially during this period but were constricted in their homes and were impacted in other ways. This time paved way for a new demand trend of expansive homes and aggrandization to larger spaces. Extravagance became a necessity to balance the adversities of the pandemic. The business tycoons, CEOs and well-funded startup founders started looking for opulent abodes in plush locales with abundance of hi-tech amenities and green landscapes.
This group of clients is demanding homes with customized workspaces to esoteric layouts with exceptional furniture and entertainment zones, biophilic designs, uninhabited rooftops, basal and uncontaminated indoor environments, and other contemporary specifics for a placid living. The Indian market meanwhile has matured in terms of its projects in this segment too. Key real estate developers are offering uber luxury residences with premium amenities in the heart of metros, like Karol Bagh in New Delhi. Many of them have collaborated with the likes of Versace for interior designing while maintaining standards of greenhouse living as well.
The Non-Resident Indians have in recent past become very amenable to invest in their mother country and comprise a substantial cortege of the luxury residential sector. There are many factors influencing the decision of this segment of the consumers. The fall in the rupee value which automatically gives them an advantage is one factor along with the deep concessions offered by developers. Additionally during the pandemic the Non-Resident Indians felt the emotional need to stay connected to their roots and decided to purchase properties back home. NRI investments amounted to close to USD 13.1 billion in 2021 and are estimated to grow by 12% in 2022.
The luxury growth trajectory is also influenced by people who are keen on having a home away from home, a factor induced yet again by the pandemic. Remote working became the norm and many took up places in the hills and small towns away from the hustle of big metros. This is the time, redundancy of physical office spaces dawned upon everyone and people realized that work could be handled remotely just as well. Owing to this realization many with the financial wherewithal started eyeing a second home in picturesque and quaint places in the hills or the beaches.
The augmented predilection of HNIs and NRIs to invest in luxury residences in the form of villas, pent houses, bungalows etc has breathed a new life in the otherwise sluggish real estate industry thereby servicing the market’s progress. The luxury segment’s sales figures are projected to overshoot all previous yardsticks in the near future. This surge of interest in the luxury real estate by HNIs and NRIs has proved to be an aegis against the effect of the pandemic on the country’s real estate sector.
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Views expressed above are the author’s own.