Here are reasons why the demand for luxury housing did not get impacted due to the lockdown and why the demand will witness a consistent rise in the future.
Real estate has always been considered to be a growing industry; it is also the safest and most trustworthy investment in the present market conditions. Residential real estate and commercial real estate have been the two main components for investment in the industry. Investment in residential real estate differs significantly from commercial real estate. Most of the properties undertaken in residential / housing sector in the last two years have been in the affordable housing between Rs 40 lakh and Rs 60 lakh. Premium or luxury housing demand remained constant with hardly any change. The two Covid lockdowns could not have more than 5% impact on the luxury residential segment business loss.
There are numerous reasons for the lower impact of the pandemic on luxury housing. Premium housing demand is generated through a niche segment of people. People at CXO roles in MNCs and bigger corporate, business families, HNIs and NRIs are usually the key target audience for this segment.
Below are reasons why the demand for luxury housing did not get impacted due to the lockdown and why the demand will witness a consistent rise in the future.
Aspirations of young population – “Dream big to be big in life” is a common saying amongst today’s young population. Today’s youth believes in planning at every step in their life- whether it is about their dream destination wedding, dream car or the house of their dreams. Luxury housing is inspirational for today’s youth and they desire to have a house with the best of amenities. Due to their planning skills, Covid or no Covid, they do it at their desired time. This category has been instrumental in driving demand for the premium luxury housing and the demand from this segment will only grow in the times to come.
Changing ways of life – There will be a rise in joint family living over a few more years. Covid has changed the mindsets of many families who now dismiss the existing concept of nuclear families. Many people have already started living with their parents, grandparents, and uncles and aunts, to be together in case any such massive emergency comes back in future. This league of people just wanted to ensure the safety of their loved ones.
Better amenities and security – With premium housing come better facilities and amenities. This segment of housing not only provides better security from theft eventualities, but can also protect people from diseases and viruses due to its high level of sanitization and hygiene control. 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.
Demand from the niche segment– The existing demand from top level executives, business class, NRIs and HNIs will always be on the rise. Demand from this segment will not get much affected from any kind of external factors. The pandemic also witnessed maximum demand from this segment, many of whom have purchased properties solely from investment perspective. Also, with the dollar-INR difference growing the interest from HNIs and MRIs will further see an advancement in investment in premium living.
Price escalation is lucrative– The other important aspect of luxury and premium is the return on investment its offers. 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.
In conclusion, every Indian aspires to have a house of one’s own. With the pandemic that urge has become even stronger. People who were postponing the purchase decision will further fuel the overall housing demand in the years to come.
(By Sachin Arora, Director of Investors Clinic)