Spurred by homebuyers’ growing preference for bigger homes, depreciating rupee, rational pricing, and digital boom, the luxury housing market is on a roll across the top cities of the country, including Delhi-NCR.
Accoridng to ANAROCK Research, of about 1.84 lakh housing units sold across the top 7 cities in H1 2022, about 14% (close to 25,700 units) were in the luxury segment as against just 7% (close to 17,740 units) in the whole of 2019. Encouraged by the healthy demand for luxury homes, developers have stepped up new supply in the luxury segment, launching over 28,000 units priced >Rs 1.5 crore across the top 7 cities in the first half of 2022.
Industry experts say because of the minimal impact of the pandemic on this buyer-class, luxury segment has performed significantly well in the last two-and-a-half years since the pandemic.
“Discounts and multiple offers doled out by developers have made such properties far more lucrative and attractive for several buyers. It also scores high with NRIs due to the depreciating rupee translating into greater buying power. Last but not the least, besides the factors mentioned earlier, luxury housing sales are doing fairly well because of the growing preference for bigger homes,” said Anuj Puri, Chairman, ANAROCK Group.
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One of the key features of a luxury home is its expansive size and amid the WFH option during the pandemic, several home buyers were seen upgrading to a bigger space. They wanted bigger size homes in order to accommodate their new needs. This has boosted luxury sales in turn. The luxury growth trend is likely to continue in the future as well because many with the financial wherewithal are now also eyeing a second home, not purely from an investment perspective but as a home away from home.
“Over the last few years until the pandemic, we saw a significant decrease in new launches. Revival of demand in this segment aided by the pandemic has helped in reducing the unsold inventory. Developers continue to receive interest from the HNI segments who are seen to be diversifying their portfolios post the pandemic. Developer credibility, on-time project delivery, rational pricing, low-interest-rate cycle, the introduction of RERA are all factors that have added to the demand for luxury residences, which is bound to see sustained growth going forward,” added Puri.
The Mumbai Metropolitan Region (MMR) and the National Capital Region (NCR) have led luxury home sales with H1 2022 seeing close to 17,830 units sold in these two cities alone. In 2019, they accounted for a mere 11,890 luxury homes sold in the entire year.
“Since the beginning of 2021, there has been sustained sales growth across major Indian metropolises, but NCR saw a sizeable jump in demand for luxury homes. In the past two years, the housing market in Gurugram has emerged as a hot real estate investment destination, with annual price growth reaching record highs. Today’s discerning buyers have directed their purchase decisions towards luxury homes, wherein earlier they would invest in other asset classes or luxury goods,” said Aakash Ohri, Group Executive Director & Chief Business Officer, DLF Ltd.
One of the most significant trends this year has been the influx of demand for homes in luxury and above segment. In India, while there has always been an appetite for property, people have preferred other asset classes to invest in, which has significantly changed since the onset of the pandemic.
“Today, luxury homes are no more about the brick and mortar only, but the overall living experience with convenience and every amenity and facility, allowing people the time to pursue their passion. Likewise, second homes, once considered a luxury, have become a necessity for a growing segment of consumers with greater spending capacity and need to have an extension of their current homes,” added Ohri.
The recent surge in demand in the luxury segment is a testament to resilient consumer mindset of giving impetus to the experiential aspect of life. “It is not just true for real estate but luxury buying has seen this pattern across other categories too. Consumers have become discerning and with global exposure, their expectation of a luxury home has been redefined. The amenities that were considered a luxury at one point in time are now table-stakes. Hence developers need to be more innovative in terms of their offering to be able to meet consumer expectations. Driven by strong consumer insight, Smartworld will soon be offering tastefully-designed products offering in the newer micro-markets of Delhi-NCR,” observed Vivek Singhal, CEO, Smartworld Developers.
Santosh Agarwal, CFO and Executive Director, Alpha Corp, said, “The demand for luxury homes is currently surging due to the safe and secure environment a luxury home offers for leading a luxurious and carefree life. Homebuyers today perceive security in a variety of ways. According to realty experts, high net worth individuals are currently looking out for high-end estates and mansions within gated communities to ensure the safety and security of their families. Given the circumstances, it makes sense to assume that the luxury housing segment in India is going to remain strong over the next few years because of the abundance of lavish amenities and the necessity for full-fledged security and safety that they provide.”
Developers say the demand for luxury homes has been steadily improving in the post-pandemic era, as they live up to the promise of adequate space, convenience, wellness, security, and grandeur.
“Additionally, the segment is stimulated by low interest rates and Government policies like RERA, which has ensured only the able developers stay in the market. The falling rupee & unstable stock market have also enticed NRIs and investors to put their money in luxury homes. HNIs and NRIs are making significant investments in luxury housing for maximising returns and in some cases as a part of future planning. The demand for luxury housing can also be attributed to the inherent need, after the pandemic, to own a home where one can look forward to lead a retired life with all amenities within the premises & accessibility to great social infrastructure nearby,” said Ashok Singh Jaunapuria, MD & CEO, SS Group.
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