Despite property prices rising up to ~40% across the top seven cities of India over the last 24 months and higher mortgage rates, demand for luxury real estate remains high, and as much as 71% of UHNIs and HNIs in India wish to buy luxury real estate in the next 12-24 months, compared to 61% last year, according to a survey conducted by India Sotheby’s International Realty.

Amongst the top reasons to buy, there has been a perceptible shift. Most affluent investors have picked capital appreciation as their primary reason to buy real estate over the next 12-24 months, overtaking lifestyle upgrade as the foremost. This indicates that investors are back in the market. Several of those surveyed have also said they are looking to create assets for the next generation, which gives the sense they are investing in property for the long term.

The annual Luxury Outlook Survey 2024 reveals a robust economic optimism among High-Net-Worth Individuals (HNIs) and Ultra High-Net-Worth Individuals (UHNIs), with 79% expressing confidence in the Indian economy’s positive trajectory for 2023-24, compared to 59% last year.

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India is shaping its destiny far more confidently than ever before. The world’s fifth-largest economy is poised to become the third-largest by 2027, according to the International Monetary Fund. The RBI pegs a GDP growth guidance of 7% in 2024.

“The rising economic momentum is reflected in record breaking housing sales numbers in Indian real estate in 2023 and an all-time high stock market. We believe the top end of the real estate market will benefit the most in the next 12-24 months. The affluent class is expected to nearly double to 100 million people within three years, according to Goldman Sachs Group Inc. India’s ultrawealthy are growing. The robust start-up eco-systems and a growing number of unicorns have added to the swelling ranks of the super-rich. Our Luxury Outlook survey findings indicate a renewed and heightened interest among investors who now view real estate as a compelling avenue for long-term wealth creation,” said Amit Goyal, Managing Director, India Sotheby’s International Realty.

“We are witnessing a remarkable shift in economic sentiment, reflecting the resilience and potential of the Indian economy. We are not surprised that there’s been a substantial increase in the launches of new luxury projects across the top seven cities in 2023. There’s also a shift in sentiments that aligns with a broader acknowledgment of real estate’s enduring value and potential for sustained financial growth. We believe investors are strategically positioning themselves for wealth accumulation and creating multi-generational wealth through real estate investments,” adds Ashwin Chaddha, CEO, India Sotheby’s International Realty.

As far as interest rates on home loans are concerned, 56% of HNIs and UHNIs believe that the RBI will start reducing interest rates in 2024, indicating a positive mortgage and financing outlook.

The survey also reflected that a staggering 83% of affluent Indians own multiple luxury properties, reflecting a trend of diversified real estate portfolios among the elite.

Apart from primary residences, respondents showcased a diverse array of real estate assets, with 34% owning commercial real estate, 25% holiday homes, 21% agricultural land, and 20% farmhouses.

In other notable findings, 35% of holiday home buyers expressed Goa as their preferred destination, highlighting the enduring appeal of Goa’s lifestyle among India’s wealthy. Desire to invest in overseas property remained stable at 12%, with Dubai UAE, and USA maintaining their positions as top choices.

43% of UHNI and HNI respondents expressed a desire to consolidate their portfolios, focusing on better quality properties and rent-yielding assets. 34% of UHNIs and HNIs have shifted to digital mediums, including 3-D virtual reality and walkthroughs, to research and view properties, underscoring the impact of digital transformation even at the top of the luxury housing market.