by Pratik Kataria, Director, Sainath Developers - The House of Kataria & Committee Member, NAREDCO Maharashtra
In recent years, India's luxury housing segment has witnessed an extraordinary surge across major cities, fueled by the escalating disposable incomes and burgeoning aspirations of its populace. This surge is exemplified by the proliferation of new luxury residential projects, featuring prices ranging from Rs 2-3 crore per unit to Rs 12-15 crore.
According to a research report by Anarock, the luxury category embarked on a remarkable growth trajectory, constituting approximately 18 percent (about 65,680 units) of the total 365,000 units sold in the top seven cities in 2022. This marks a stark contrast from the mere 7 percent (around 17,740 units) of the total 261,000 units sold in 2019.
The surge in demand for luxury real estate can be attributed to various factors. The expansion of the Indian economy and the advent of diverse business models such as technology, venture capital, social media, and startups have given rise to a new class of affluent individuals with substantial purchasing power. This nouveau riche class perceives real estate as a symbol of their elevated lifestyle aspirations and is willing to make significant investments in their living spaces. High Net Worth Individuals (HNIs) and Ultra-High Net Worth Individuals (UHNIs) view real estate as a crucial long-term hedge against inflation, further propelling the demand for luxury properties. The recent escalation in raw material prices, such as steel and cement, indicates an impending rise in property prices, presenting an opportune time for investment.
Delhi-NCR, Mumbai-MMR, Hyderabad, Pune, and Bangalore have emerged as hotspots for high-end units, with Mumbai and NCR accounting for more than half of the overall sales. Mumbai, in particular, has witnessed numerous record-setting transactions involving industrialists, CXOs, actors, and sports personalities, underscoring its status as the country’s largest and most expensive real estate market.
The overarching trend of rising prices entering the market can also be traced to the increased demand for luxury real estate. India's rapid wealth creation coupled with pent-up demand from the Covid times are propelling sales of luxury products, including real estate. The Covid-19 pandemic and geopolitical disruptions like the Russia-Ukraine war and conflicts in West Asia have prompted the affluent to invest in real estate, considered a relatively safer asset amid global volatility.
The surge in demand isn't limited to domestic buyers; there's also an increased demand from Non-Resident Indians (NRIs). Ultra-high-net-worth as well as high-net-worth individuals are increasingly investing in luxury real estate, with 75% of them believing that real estate will perform well over the next two to three years. Mumbai, Delhi-NCR, Goa, and Bengaluru are among the preferred locations for these discerning buyers.
Developers are meeting this rapidly growing demand by offering a diverse range of luxury properties, ranging from high-rises to duplexes and gated communities. These projects showcase world-class amenities and international construction standards, attracting affluent buyers seeking a premium living experience. The surge in luxury apartments can be attributed to three primary factors: the problem of plenty, with developers vying to provide the most magnificent facilities and amenities; the index of cost, where pricing is influenced by location, amenities, brand value, and availability; and a matter of class, where luxury residences exemplify a standard of living synonymous with sophistication and opulence.
The escalating demand for luxury apartments in India mirrors the evolving desires and lifestyle preferences of its affluent population. With supply meeting demand and developers striving to surpass consumer expectations, the luxury real estate market is poised for sustained growth, ensuring a top-notch living experience for sophisticated buyers across the country.
