Despite rising property prices, demand for luxury homes continues to triumph over markets across cities

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Mr Angad Bedi, MD, BCD Group

Preferences are shifting from affordability towards upgradation and opulence, and this is evident from the rise of the luxury segment that the residential real sector has witnessed over the past few years. According to the recent Cushman & Wakefield MarketBeat reports the housing market in major markets has seen a growth in luxury launches with Delhi NCR witnessing a total launch of 11,633 units as compared to around 4500 unit launches in H1-22.   Similarly in Bengaluru, with total launches standing at about 9000 units, the luxury segment dominated about 45% share which was around 15% in the previous quarter.

The report also states that on a pan India level, there has been a 6% growth of new supply, with the total launches standing at 1.54 lacs units in H1-23, as compared to 1.45 launches in H1-22. Luxury home sales in India doubled in the first half of 2023, with 6,900 units sold, up from 3,000 units in the same period last year. Luxury home sales in India surged 130% year-over-year in the first half of 2023, with 6,900 units sold compared to 3,000 units in the same period last year.

This is a positive sign that the demand for luxury homes continues to triumph, and the momentum is likely to accelerate.

When it comes to the key reasons behind this shift, the main contributor is the willingness of buyers to invest in lifestyles driven by aspirations to own larger homes, and second residences and move towards a higher quality of life. Capital appreciation is another key reason which is why a lot of homebuyers are willing to invest in luxury properties that have higher appreciation potential as compared to affordable properties.

In this current scenario where there is some uncertainty in the global economic environment, HNIs and UHNIs also consider investing in luxury properties in India as a safe bet against the volatile equity market. India is emerging as a preferred manufacturing destination and a lot of global enterprises are keen on expanding in the market with India’s improved ranking in Ease of Doing Business as a key factor. This has impacted the residential real estate market directly and the HNIs & UHNIs see the luxury segment as a key value appreciation machinery to get good value in the long run.

Besides, the dominance of the luxury and the premium segment is driven by the growth of high-net-worth individuals, businessmen and investors, backed by a flourishing business climate, thus giving builders more confidence in launching premium projects as there is a fairly developed consumer base who are ready to buy a luxury property at any given premium price-point. 

Moreover, in India the government has introduced policies which protect the buyer interest, thus creating a favourable environment for the luxury segment to grow. Recently the RBI has announced an unchanged repo rate, which increased the buyer confidence and hence the investment activity got a major boost.

In a nutshell, it can be rightly deduced that the luxury segment of the Indian residential real estate segment is in a strong position as it continues to witness strong demand. As India’s economic resilience gets more traction, the ongoing momentum is likely to increase, thus creating more possibilities for the luxury segment.