The future of luxury housing in India | The Financial Express

The future of luxury housing in India

The luxury housing segment is ready to usher in greater heights this year, thanks to the booming interest and confidence amongst buyers.

The future of luxury housing in India
The concept of luxury living has evolved over the years; consumers today are looking to live in well-connected ecosystems with a myriad of choices for work-live-play.

Luxury housing is one of India’s most dynamic real estate segments, witnessing an impressive bounce-back after the pandemic and remaining mostly insulated from larger market conditions. With the luxury market driven by end-users at the top of the wealth pyramid and lacking dependence on home loans, the segment has emerged as a worthwhile investment destination. Along with the promise of an elevated and effortless lifestyle, developers have been able to effectively translate evolving trends into luxe projects that meet the needs of consumers and the market.

Both innovation and exposure to global aesthetics have transformed the way we live in India. With the importance of owning a home coming to the forefront, investing in luxury residences (a key lifestyle statement) is the natural next step. This is reflected in the growing absorption rates of luxury housing over the last three years and a return of Non-Resident Indians (NRI) confidence. With its relatively healthier returns, NRI buyers will be a mainstay in the luxury housing market, both in the short-term and long-term.

The changing market dynamics

There is a growing interest in the luxury segment from two primary groups. One is the rising number of high net-worth individuals (HNIs) who aspire to a superior lifestyle. The other is the Indian diaspora, who are demonstrating a greater interest in the Indian real estate sector than ever before. The rise in NRI investments in the Indian real estate market has been driven not just by financial reasons but also by emotion – a sense of security and the uncertainties posed by Covid-19.

Today’s NRI homeowners are making their purchase decisions based on parameters such as the credibility of developers, market leadership in the sector, corporate governance, quality of construction, the promise of timely delivery, reassurance of continued impeccable levels of service, and a true penchant for world-class hospitality.

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The concept of luxury living has evolved over the years; consumers today are looking to live in well-connected ecosystems with a myriad of choices for work-live-play. Luxury living has also seen a shift towards personalised and fully serviced residences, including maintenance, concierge services, high-end amenities, state-of-the-art security and other quintessential offerings, with buyers growing to appreciate the inherent value of such services and the investment possibilities that these residences present.

Furthermore, hybrid-work has radically changed the luxury real estate sector. Today’s homebuyers seek larger homes with flexible layouts, designated work areas, more natural light and ventilation, outdoor spaces, and other features that cater to their overall well-being. Proximity to strong social infrastructure such as the best international schools, hospitals, retail spaces, banks and more attracts not just NRIs but also millennials and other new-age buyers who want a slice of a global lifestyle surrounded by a like-minded community.

NRIs prefer investing in Indian real estate

NRIs purchase properties in India either for investments or to use them for rental purposes. The attraction also comes from an innate desire to be closer to their roots back home, providing a better lifestyle for their family and benefiting from a significant price appreciation over a period of time.

As per a recent industry estimate, NRI investments in Indian real estate hit an all-time high of $13.1 billion in FY21 and may rise to $14.9 billion in FY22.1 A significant percentage of these NRIs make up India’s international UHNI population, and about 55% of those who own real estate in India will allocate their wealth towards buying a second home here. The report also estimates that nearly 13.5% of these millionaires will increase their investment in real estate in the next 3 years. By 2022, 30–35% of investment in real estate in India will come from the NRI segment.

With the concept of remote working dissolving all geographical boundaries and hybrid-work offered by businesses, there is an augmented demand for the second home market.

Over 75% of the NRI searches are directed towards the southern markets, especially Karnataka, Tamil Nadu, and Kerala, for real estate investments. Karnataka tops the list with the most searches, comprising over 31%. There is the greatest demand for properties in Bengaluru, thanks to its position as the Silicon Valley of India, the start-up hub for many e-commerce unicorns, and housing many MNCs and Fortune-500 companies.

Investing in a luxury property brings with it the advantages of capital appreciation, good rental yields, and continuity to an NRI’s global lifestyle. The Indian real estate sector is witnessing increasing demand and inquiries from NRIs, especially from the GCC, USA, and UK regions. These buyers are keen on making big-ticket investments in the market as a result of increased transparency and eased investment norms; the recent depreciation in the Indian rupee; stricter regulatory measures; and enhanced consolidation in the sector. The increased demand is majorly driven by NRIs from GCC, with the dirham gaining value against the rupee and since citizenship is not an option available to Indians based in the Gulf region.

Bengaluru is the most preferred destination for NRI homebuyers

Bengaluru is one of the best cities to invest in real estate. The gamut of premium, luxury, and ultra-luxury projects makes it a top investment destination as it provides NRIs with the same lifestyle they would find in other countries. Bengaluru is also home to a range of serviced and branded residences, gated villa communities, expansive condominiums and more, offering a range of luxury for every kind of buyer.

With its pleasant weather, positive customer sentiments, heightened commercial activities, and upgraded infrastructure, along with improved job opportunities, Bengaluru is the epicentre of encouraging growth. Close to 75% of NRIs look for 3 and 4 BHK homes, with Bengaluru as their most preferred destination, followed by Pune.

The leading demand is in North Bengaluru. The region became India’s first true aerotropolis with the emergence of Kempegowda International Airport at Devanahalli. The resulting infrastructure investments around the airport and its neighbouring zones, along with the development of large IT/SEZ and business parks in the vicinity, amongst others, contribute to its reputation as a prime homebuying hub.

Conclusion

The luxury housing segment is ready to usher in greater heights this year, thanks to the booming interest and confidence amongst buyers. Catering to the growing demand for luxury homes, developers are focused on continuing to raise the bar within the sector. Dynamic infrastructure, architectural and design innovation, high-end amenities, the best-of-locations, and more have contributed to bringing NRIs back to the Indian real estate market. With developers catering to these trends, the market is set to become more attractive and profitable in the coming years.

(By Reeza Sebastian Karimpanal, President–Residential Business, Embassy Group)

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