“REALTY IN REALITY”
The growth of Indian economy and increased urbanization over the years have undeniably been driving the overall realty market of India.
The evolution in the luxury market has seen its highs and lows through the real estate cycle. The market, which was flourishing initially, slowed a bit by the mid-2010s as developers got inclined towards building affordable houses. That was the time when the affordable housing market became quite lucrative as the demand-supply gap widened, and several incentives as a part of the government initiative to address the gap were offered. Development of luxury properties too, however being done simultaneously, wasn’t making strides. As pent-up demand piled up, the luxury residential market became once again vibrant during 2015-2020. High-rise developments by reputed developers were dotting the skyline. It was the era of co-branded residences in Mumbai, Delhi-NCR, Bengaluru, and Pune, a new luxury dimension. Michael Schumacher World Tower in Gurugram, World One in Mumbai, Water’s Edge by Equinox Realty in Bengaluru among others are some of the marquee co-branded developments of this time. The mix of 2 Ps – Place and Product expanded to another ‘P’ – Promotion with this new segment of residences.
Demand for luxurious second homes offering unparalleled experiences also gained momentum in this period, especially by the HNIs and UHNIs, who looked to diversify their portfolio. The concept of branded residences and themed villas, offering ease of life and conveniences, emerged under the super luxury segment to meet the extraordinary expectations of aspiring buyers. They have been able to grab the eyeballs of NRIs as well, who wish to possess a home in their home country that goes well with their global inspirations.
Fast forward to recent times, the pandemic influenced the mindset of buyers to a great extent. The previous instincts of flashing elegance through ownership of luxury homes got substituted by the desire to own luxury apartments that meet aspirations of today’s generation. The quest for a better and dignified lifestyle became the new force driving the luxury market. This was evident by the new launches in Gurugram and Bengaluru that increased 2.7x & 2.8x respectively in 2022 over the preceding year. The Delhi market too witnessed a fresh launch of approximately 1,550 luxury units in the same year.
It seems that the market has adjusted to the new pricing and interest rates. Despite the rising inputs ‘cost, the pricing of luxury residences has spiraled, indicating that the demand for this segment has never been cost sensitive but always driven by their appeal.
Millennials arose as the new set of buyers looking for uber-rich properties that reflect their life ideals and satisfy their ever-changing needs. Along with the safety, work from home / hybrid work model has induced the want of bigger and comfortable space decked with modern technologies. This re-defined the luxury with the new price benchmarks being established across India after the pandemic.
With ‘Place’ undergoing a mindset change from just an ‘address’ with ‘second home’ locations gathering attention post COVID, the ‘Pricing’ aspect has also evolved too. There are several organizations offering fractional ownership in properties that also manage and operate developments. They offer a combination of steady return and capital appreciation which has made ‘luxury’ affordable to the ever-growing middle class.
The spur in luxury sales recorded in recent times cannot be attributed alone to the dynamic market forces. Statutory interventions like reduction in stamp duty by various state governments have also been playing a vital role in keeping the sales buoyant. What has been proved to be an icing on the cake in pushing the luxury sales in H1 2023 is the limit deductions from capital gains on investments in residential houses to INR 10 crore, which is supposed to come in force from April 1, 2024.
All these developments have set the ball rolling for luxury real estate market of India. The market has been growing competitive with the presence of developers catering to this segment. The demand in future is expected to be driven by the buyers desiring homes that are fascinating, offer wholesome lifestyle and meet sustainability goals. Developers have been aligning the supply in sync with the new trends the market is witnessing. All this is anticipated to propel the market onwards and upwards
