With economic activities coming back to normal, the luxury real estate market has made a strong comeback. In fact, homes are no longer about brick and mortar but the overall living experience. This sentiment seems to be the biggest influencing factor in rising demand for larger homes with premium amenities. A recent poll conducted by India Sotheby's International Realty also reports that a significant number of HNIs are intending to buy luxury homes in the next two years, per, suggesting a significant and definitive reversal in the luxury real estate segment.
Ashish R Puravankara, Managing Director, Puravankara Limited shares his views, “The advent of the pandemic has changed the preferences of homebuyers. As the home becomes their safety net, the requirement for bigger living spaces has also grown. This is one of the key factors that has pushed the demand for luxury housing. People prefer luxury homes as it provides the safety and security of a gated community along with more open green spaces and multiple amenities which promises a better lifestyle. Secondly, investing in a luxury project as an asset is a better option than conventional ones. Its value appreciates over time and it also offers a good rental opportunity to the investor. Thirdly, the renewed interest of UHNIs, HNIs, and NRIs in the Indian real estate market especially in the luxury segment (residential) has further pushed the traction for luxury and ultra-luxury projects.”
Kamal Khetan, Chairman & Managing Director of Sunteck Realty Limited expressed, “The spectacular surge in demand for luxury homes, as seen at record highs in Q1 2022, can be attributed to three distinct factors: a healthy, pent-up demand, a highly favourable interest rate regime for home loans and attractive price levels, with the promise of a significant upside potential. Demand-wise, luxury property accounted for over 12% of overall sales in Q1 2022, up from 7% in Q1 2019, according to industry data. Ultra HNIs - the driving force behind the upswing – are using the beneficial environment to buy assets for home upgrade, rental income opportunities as well as wealth creation prospects through capital appreciation. The demand is firm across all kinds of luxury real estate such as luxury apartments, ultra-luxury condominiums and villas with high-end amenities, wide-open spaces and serene backgrounds. With regards to the demand efflux in the Mumbai market, we believe that low-interest rates on home loans and a reduction in stamp duty charges during 2021-22, accompanied by a rising income level in sectors such as IT/ITES, BFSI, and pharma, have led to greater affordability in India’s most valuable market.”
Dr Mohit Ramsinghani, Chief Sales Officer - Luxury Sales and Marketing, Shapoorji Pallonji Real Estate added, “There was a time that home was a necessity, today the concept has changed to modern & luxury homes as a necessity. Buyers want to upgrade their living space with greener surroundings, best-in-class amenities, top-notch services, opulent interiors & larger spaces. People living with the gated community of premium housing have been more protected even during the Covid pandemic. This will become a key demand driving force in future. The demand from top level executives, business class, NRIs and HNIs is on a high seeing the attractive price point levels, 2021-22 was the best year to buy a luxury home at the desired price point. The escalation of prices of property is inevitable. One of the biggest reasons for increase in prices is demand-supply gaps. The demand has been constantly rising while the supply has been very limited.”
Reeza Sebastian, President, Residential Business, Embassy Groups elaborated, “Consistent consumer demand throughout the pandemic has re-affirmed residential real estate as the safest asset class to invest in. In particular, luxury housing demand has been steady throughout the two waves of Covid-19 and the lockdowns – with almost a negligible drop. There has been a significant increase in demand for homes with a larger carpet area and ultra-modern facilities as consumer choices evolve. This goes hand-in-hand with the growing aspirations of homebuyers who want to upgrade their lifestyle and quality of life. Further, consumers have demonstrated a greater predilection towards expansive and verdant plotted developments in self-sustainable townships. Within these communities, homebuyers can benefit from an amalgamation of urban and natural living. Additionally, previously, NRIs bought properties primarily for investment or rental purposes.
The pandemic, however, was a wake-up call, as we witnessed a rise in NRI investments, driven not just by financial reasons, but also by emotion and the sense of security of owning a home in their motherland. With India home to several start-up unicorns, we have also concurrently seen a growing HNI and UHNI population who are eager to invest in luxury properties. Around 31% of HNIs believe it is an apt time to invest in residential real estate with the sector anticipated to begin its price escalation in the second half of the year. A recent survey by India Sotheby’s International Realty demonstrated that around 75% of HNIs are looking to buy luxury residential properties over the next two years – both in the major metro cities and holiday destinations, indicating that the segment will continue its upward trend. Furthermore, technology has played a major role in bridging the gap between developers and home buyers, as well. Developers today are organising virtual tours, digital inspections of properties, processing documents, finalising paperwork, and allowing for the purchasing of properties online – all without having to make any in-person visits. This, in turn, has aided in sustaining buoyed consumer interest and making homebuying a seamless process in today’s hybrid world.”
Sunil Kumar V, Managing Director Asset Homes concurred, “Luxury housing segment recovered resolutely from the stifling effects of the pandemic, surpassing market expectations and garnering the attention of several high net-worth individuals (HNIs). A large number of HNIs are proposing to buy luxury property in the next two years, reflecting a strong and decisive turnaround in the luxury real estate segment. The segment has gained traction among buyers wanting to upgrade their living space with greener surroundings, best-in-class amenities and top-notch services. The digital boom, which has recently pervaded the real estate sector, has also contributed substantially to the booming luxury market. Also because of the growing WFH culture, the perception that compact homes are more liveable is getting outdated and homebuyers now prefer to move into large spaces.”
Sarveshaa SB, Managing Director, Bhadra Group added, “The burgeoning luxury housing and premium boutique homes market in Bengaluru are attracting attention of people with finer tastes and lifestyle in the centre of the Bengaluru city. With the properties offering world-class facilities coupled with picturesque landscape, the ultra-rich are enthusiastically investing in these. Homebuyers love to invest in luxury properties in Bengaluru, due to the strong infrastructure of the city and also the design of the homes that meet their international lifestyle.”
WHY INVEST IN LUXURY HOUSING
Falling Rupee Value: The falling value of the rupee against the dollar has presented a unique opportunity to NRIs to invest in luxury properties. According to a recent survey by the Anarock-CII, 47 percent of the NRI realty investors have invested in luxury properties for investment purposes.
Low Returns from Other Financial Instruments: Traditionally. HNIs preferred investing in financial instruments such as Gold, Fixed Deposits, Direct Stocks and bonds. However, the low and uncertain return potential of these instruments has made the rich investors turn to luxury properties for a good return in a time horizon of 5-7 years.
Competitive Property Prices: The buyers are well-positioned to bargain a good deal as residential real estate is still recovering and most developers to clear the ready yet unsold inventory are offering the investors with pricing options.
High Rental Yield: Luxury properties though costlier than other property segments, also generate excellent rental yield for the investors and can prove to be THE PRICE, EXPERIENCE & AMENITIES
Post pandemic like other residential segments, the luxury real estate market too is gradually recovering and offering value for money propositions to the willing buyers. Cities like Mumbai, Delhi, Bengaluru and even Hyderabad are registering high-end property transactions with 3-4 Crore ticket size witnessing excellent offtake.
According to Dr Mohit Ramsinghani, “Dream big to be big in life” is a common saying amongst today’s young population. “Luxury housing is inspirational for today’s youth and they desire to have a house with the best of amenities & ticket size of 5 to 10 crores being the most preferred ticket size in luxury residences. Also we have seen multiple high end 50 crores plus ticket size transactions by CXO’s & Business Leaders to upgrade their homes & move to a much advanced & world class gated development.”
“The segment of investors in luxury properties comprises a mix of tech-savvy millennials as well as people appreciative of fine living. Aesthetic interiors, sustainability and multi-functional spaces are the key preferences of people. The ticket size varies from location to location and region to region. The prices and the sizes are purely dependent on the location of the project. If a project within the city will cost more than the project on the outskirt with the same amenities in the offering. Also, the prices differ from city to city e.g. in Bangalore, a luxury apartment within the city limit which ranges between 1300 sq ft -1500 sq ft with a price of above Rs.1.5 cores may fall into luxury. Whereas same in Mumbai will cost triple in comparison to Bangalore,” shared Ashish R Puravankara.
As per Kamal Khetan, Mumbai commands a huge premium for its ultra-luxury & premium luxury homes. “Many developers are attracting a completely new clientele for new offerings, there is a good demand from existing clients to upgrade into larger, spacious homes. They also demand greener spaces, amenities and activities within the environs that stimulate their physical and mental health. They are equally choosy about the brand they want to be seen with, the quality of product offered and the address they want to be associated with. Clearly, this scenario has given a clear advantage to branded, financially strong developers like us. We are trying to implement globally accepted ideas like lounges with glass dividers, multiple lobbies, touch-less entries, motion sensor lighting, re-engineered ventilation systems, wider lobby stairs and separate outlets for deliveries in line with pandemic realities and safety aspects,” he said.
Sharing his perspective on Bengaluru Sarveshaa SB said, “Every year Bengaluru witnesses a rise in 100,000 employees in the IT/ITeS sector alone, where the ultra-high-salaried comprises five percent of the total
population. These people are constantly on the lookout for high-end homes, especially villas, luxury residences, and premium boutique homes. Moreover, after the pandemic, when social distancing and other Covid-19 protocols have become a way of life people are becoming increasingly protective of their families. So those who can afford are pivoting towards the premium boutique homes. Known as "limited edition" residences, these premium boutique homes are constructed in some of the most sought-after locations with very few units.”
Reeza Sebastian added, “Uber-luxury villas, villaments, plots in self-sustained communities where buyers can design homes the way they envision, condominiums, holiday homes, and fully-serviced residences are the most preferred property types. As per a recent industry report, most luxury home buyers are looking at properties priced at 5 crores and above. For a luxury villa, the average budget is between 10 to 25 crores, with a smaller percentage of home buyers investing in the higher end of 25 crores and up to 90 crores.”
In terms of consumer preferences, homebuyers today are keen on a holistic living experience, keeping both sustainability and wellbeing at the centre. In line with this, developers have focused on designing homes that ensure spaces are multi-functional, have dedicated workspaces, and have silent zones or relaxation areas. The attention to good ventilation, lighting, ample green spaces, and other areas that have a significant impact on one’s well-being has become a pivotal demand. Lap pools and lounge pools have also seen growing interest.
As per Sunil Kumar V, Most of the projects will have good swimming pools, grand entrances, and open spaces, well designed party areas on roof top and children play areas. “We have started providing proper mini theatres for movie watching which can accommodate 20-30 persons depending on the number of units. The preferred home configuration is 3-4 bed rooms with area ranging from 1900- 2400 sft.”
Ashish R Puravankara believes that today’s home buyers are looking for homes with a holistic living experience. He said, “Luxury for today’s home buyers does not mean marble floors or chandeliers on the ceiling only. They look out for multifarious features in terms of interiors and amenities. Apart from spacious buildings coupled with outdoor areas, the new-age buyers seek a world-class living environment which offers an exquisite lifestyle experience. Consumers are also tech-savvy and want to use app-based tech-laden tools for convenience in their daily lives. This has further pushed the demand for smart-tech-enabled homes. Being a customer-centric brand we understand the evolving needs of homebuyers. Our ultra-luxury residential line WorldHome Collection addresses the same needs. The “WorldHome” collection was conceptualized around the idea of redefining luxury. The new range offers sustainable, futuristic and exclusive homes designed by world-renowned architects. It focuses on sensibility and sophistication, which are the key decision-making factors amongst our discerning customers while buying a home.”
“Luxury apartment communities are especially stepping up to bat in providing the most innovative and creative amenities to beat the competition down the street. Getting on board the best branded high end On-site apartment restaurants are becoming increasingly popular, as they offer a convenient and luxury dining option for residents & also create a downtown living community. Concierge Services handling everything from chartering yachts to making airline, hotel and theatre reservations, private butler services, exclusive private jet memberships. The owners also benefit from help with everyday tasks such as grocery shopping, dry-cleaning pick-up and in-home package delivery. Club house, swimming pools & Spa services add the pampering to residents. Multiple zones like sports zone, arts & culture, kid’s zone, garden zone to create a complete gated community feeling with all the luxury amenities. Open to sky huge balconies & pools complete the feeling of staying in pampered luxury,’ stated Dr Mohit Ramsinghani.
“Modern homebuyers have more access to information than ever before, are well-read, well-travelled, and committed to the environment. The widespread participation in social issues means that sensitively and sustainably designed properties that address concerns about reducing our carbon footprint, conserving water, and increasing greener spaces are appreciated by buyers. Therefore, car-charging stations and community gardens are sought after. Smart living solutions, along with technology-led design, keep up with urban trends and provide social benefits to residents, shared Reeza Sebastian. She added, “In addition, homebuyers are interested in living within communities that offer a plethora of amenities, including community spaces such as rooftop or sky decks; club houses; spas; sports and wellness facilities; business centres; and Wi-Fi-enabled zones. The hybrid-work model has increased the attraction of the peripheries or suburbs, with consumers more willing to upgrade to better homes. In the luxury segment, HNIs and UHNIs have similarly seen the appeal of investing in weekend homes or private villas as a result of the hybrid-work model.”
Perceptions around lifestyles have changed substantively in response to the new reality. This is reflected in the value buyers place on community, neighbourhood, spatial design, amenities and services. HNI buyers are evincing a greater appreciation for expansive homes, branded and serviced residences, and plotted developments in integrated townships. They are looking for projects by reputed developers that have multiple features that cater to lifestyle preferences across age groups and interests. Strong sales witnessed following Q3 2021 has encouraged developers launch new projects and new phases in existing projects.
Ashish R Puravankara shared that as per the recent market reports, both international and domestic investors are showing interest in the Indian realty market and the higher confidence by investors can be attributed to the improved market dynamics across key property markets. “The resurgence of demand for housing is driven by a combination of factors including record-low interest rates and pandemic-induced realisation of the need for residential space from credible players pushing the residential segment. The luxury real estate market has seen a huge demand and this trend will go a long way. Also, luxury properties offer lucrative investment opportunities owing to their appreciating value over a period of time making it inflation proof,’ he stated.
Sharing similar sentiments Dr Mohit Ramsinghani said, “With Indian Rupee being at its lowest, The NRI community has a unique advantage of converting their hard-earned foreign income into lucrative residential options in India. Owing to the various relaxation of business establishment procedures and the ease of doing business, many foreign players and MNC's have been attracted to India. The expected rise in the number of HNI's and India's growing stature as an economic power, promises much in the luxury product segment. Post the pandemic, luxury housing market has reported significant traction; buyers are responding favourably as sale prices have corrected, making real estate attractive especially in the luxury segment. Customer confidence and market sentiments have strengthened by a positive atmosphere and most importantly, by the acknowledgment of real estate assets as guarantor of a secured future. The tide has surely turned and people are buying homes to actually stay in them and not only for investment.
Reeza Sebastian was of the view that the luxury market is driven by end-users at the top of the wealth pyramid and, unlike affordable and mid-income housing, depends more on personal wealth than on home loans. “This segment will continue to see steady demand, as
buyer profiles consist primarily of UHNIs and HNIs looking to invest their cumulated wealth. Of the around 75% of HNIs looking to buy luxury residential properties over the next two years, according to a recent survey by India Sotheby’s International Realty, 89% prefer luxury homes over commercial real estate. The pandemic has re-affirmed residential real estate’s position as the safest asset class for investments. The continued appeal of this sector will allow it to weather any short-lived disruptions, with sales anticipated to continue their ramp-up well into 2022. Buyers are willing to pay a premium for the turnkey and ‘experiential’ lifestyle that these residences offer, boosting the overall revival of the sector.”
“We believe that a positive, bullish residential real estate cycle has started, inspired by a resurgent market, worthy of investment for several reasons, including some as explained above. From a financial perspective, if one considers the inflation-adjusted rates, the present-day affordability of residential units across all segments is effectively at an all-time high,” said Kamal Khetan. “With the Mumbai Metropolitan Region, demand for second homes, not too far away from the city, is also strong, allowing developers to offer varied luxury products like sea-facing apartments and villas. Industry studies say housing in general has become much more affordable in all major metropolitan areas of India in comparison to 2015, including Mumbai which still stands head and shoulder above the rest. Thus, buyers are keen to take advantage of the advantageous market conditions,” he added.
THE INVESTOR CONFIDENCE IN RESIDENTIAL REAL ESTATE HAS INCREASED. RERA AND MAJOR BRANDS HAVE PLAYED A MAJOR ROLE IN BRINGING BACK THE CONFIDENCE TO THE MARKET.
SUNIL KUMAR V
THE INDUSTRY WHICH HAD WITNESSED SOME DIP FOLLOWING THE COVID-19 PANDEMIC HAS BEEN STEADILY BOUNCING BACK TO NORMALCY. AND THE TREND SHOWS THAT THE LUXURY HOUSING AND PREMIUM BOUTIQUE HOMES MARKET IS CONSISTENTLY RISING. SARVESHAA SB
THE RESIDENTIAL SALES MOMENTUM IS EXPECTED TO CONTINUE AS PROSPECTIVE HOMEBUYERS PREFER BIGGER HOMES WITH BETTER AMENITIES.
DR MOHIT RAMSINGHANI
THE LUXURY HOUSING SEGMENT HAS REMAINED LARGELY INSULATED FROM ANY SLOWDOWNS. A VITAL REASON WHY IS THAT BUYER PROFILES CONSIST OF UHNIS AND HNIS LOOKING TO INVEST THEIR OWN WEALTH.
GIVEN THE DEVELOPER’ PERSPECTIVE, WE WOULD SAY LOWERING INVENTORY, NEW LUXURY PRICING THRESHOLDS, HIGHER DEMAND FOR NEW PRODUCTS AND MOST IMPORTANTLY, THE NEW WORK-HOME SCENARIO WILL CONTINUE TO INSPIRE THE DEMAND FOR LUXURY HOMES WELL INTO 2023-24.
TODAY HEALTH, SAFETY AND FINANCIAL SECURITY ARE PEOPLE’S TOP PRIORITIES. LUXURY HOUSING CATERS TO ALL OF THESE, WHICH IS ONE KEY FACTOR WHICH WILL BE PROLONGED THE GOING TREND.
ASHISH R PURAVANKARA