THE LUXURY HOUSING BULL RUN
An overwhelming number of the High-Net-worth Individuals (HNIs) and Ultra High-Net-worth Individuals (UHNIs) believe that real estate will do well over the next two to three years and a similar percentage consider real estate as an important asset to hedge against inflation. What’s more, the future demand for luxury homes seems bright as there is a fundamental shift towards home ownership across age groups and the young upwardly mobile workforce in India. Delhi-NCR, Mumbai, Hyderabad, Pune and Kolkata are the leading cities where maximum traction for high-end units was recorded. Sales in Delhi-NCR surged by over 216%, Mumbai by 44%, Hyderabad by 800%, Kolkata by 100% and Pune by nearly 13 times on a Y-o-Y basis for quarter ending Jan-Mar’ 23, as per CBRE report. WHY LUXURY HOUSING The topmost reasons for buying luxury real estate is the lifestyle upgrade. The other key motivation is the capital appreciation to create multi-generational wealth. The icing on the cake is the current availability of well-priced deals. Mumbai, Pune and Delhi-NCR had 62% cumulative share in sales of housing units in Jan-Mar’23. Going by the expert’s observations, the major factor for high sales of big-ticket price homes at the start of this year is the government’s recent move in the Union Budget 2023-24 to cap capital gains at INR 10 Cr, effective 2023. Thus, to save tax on capital gains, the HNIs across top cities have invested in luxury housing before the financial year ends in March. Now, if one sells a house and gains are more than INR 10 crore, then maximum benefit that can be availed is only up to INR 10 crore when invested into another property. Capital gains of over INR 10 Cr will henceforth be taxed from April 2023. Previously, to save on tax from their capital gains, HNIs/ultra-HNIs would mostly re-invest into an ultra-luxury property. However, to what extent this move could be a deterrent for luxury housing sales remains to be seen, but as per various industry forecasts, projects in the higher ticket range (INR 1.5 crore and above) would continue to see traction in sales. Lately, there have been a spate of new launches in this bracket and the impact of rising home mortgage rates is limited on this segment. Reputed real estate developers with a proven track record of delivering high-quality projects are considered reliable choices by the luxury homes buyers. THE DEVELOPER’S PERSPECTIVE Developers never had it so good and by their own admission, the demand for luxury homes was a surprise for many of them. The developed regions in the cities have seen the most traction as far as the luxury housing segment is concerned. Money is no longer a barrier if the project, its location and features enthused the buyers, while, the developer’s credentials in the particular micro market has been the major differentiator from the buyer’s point of view, they say. Real estate firms across cities concur that the period immediately following the pandemic provided a big fillip to luxury housing projects. And developers are providing ample new projects to cater to the growing demand for a luxury housing. According to them, both ready-to-move-in projects and recently launched offerings have drawn feasible interest. For the discerning buyers, apart from the location and size of the home, the reputation of the builder is a critical consideration including the after sales service record. The history of appreciation of the property and the likelihood of continued appreciation in the future is also an important factor for them when buying a luxury real estate. Apart from HNIs, NRIS have been the major chunk of buyers for luxury real estate. The favourable investment climate, the government’s policy initiatives and the rupee-to-dollar ratio were the key pull factors for NRIs to invest in a luxury property in India. The wealthy homebuyers are bullish on investing in luxury real estate as the Indian economy is expected to perform well and they expect a high return on investment. The better lifestyle is the perk in the meantime. Developers believe that luxury segment will continue to take rapid strides in 2023. KEY TAKEAWAYS The luxury real estate market in India is experiencing dynamic shifts and emergence of various trends both for buyers and real estate developers. While a luxury home in the city’s discerning address remains the hallmark of luxury housing, tier 2 and 3 cities with idyllic locations are seeing an influx of second home of affluent buyers. Luxury homebuyers are inclining towards integrating local elements and global inspirations for a personalized home as also seeking high-end lifestyle with health and environment consciousness. In response luxury real estate developers are planning upscale properties that can not only provide homes that are status symbol but are environment friendly and have the potential of high return on investment. The Indian government too has been actively taking steps to encourage investments in the luxury real estate sector through favourable economic policies. NOTABLE TRENDS IN THE LUXURY REAL ESTATE From apartments and independent floors to independent houses, villas and farmhouses, there is a renewed zeal for luxury. The affluent buyers are not merely content with large houses but, expect a range of high-end facilities and green certified buildings.
Tags : luxury housing bill home price revenue collections sale real estate asset High-Net-worth Individuals Ultra High-Net-worth Individuals demand mobile workforce Delhi NCR buyers developers high-quality projects home buyers investment climate