Why the rich splurged on luxury homes during the pandemic?

The luxury property market has seen a surge in buying interest from both the rich and the upper-middle class.

Luxury market is typically independent of market dynamics. Buyers buy luxury homes because they want them. They do not buy because prices have dropped or because there are many luxury home options.

A change in buyer preference, improved economic outlook and an increase in High-Net Worth Individuals (HNIs) are driving the demand for luxury homes in India. Top corporate executives, businessmen, and start-up founders, who saw their wealth increase exponentially in the last two years, are looking to move into bigger and better quality homes.

The COVID-19 pandemic has changed the way buyers view spaces. It has established homes as the safest haven, placing even more importance on having a luxurious abode, to spend time in for days at a stretch. From being just a place to return to after a long day of work, buyers want their homes to serve as an office, school, recreational area, gym etc.

Home buyers are looking for tranquil spaces, that use calm colors, softer fabrics, have more natural light and outdoor spaces. A serene atmosphere at home to protect from the chaos outside has become a must. Remote working has changed the way we see our homes. Home owners want an upgrade in home offices. Instead of working from a room with only an inexpensive desk, buyers want a larger office space with high-quality desks, chairs and storage spaces.

Another change that buyers want in their homes is a personal outdoor space. From backyards to balconies, outdoor spaces with greenery are in demand. Homeowners are adding more porches, balconies and swimming pools, so they can have a place where they can relax and take in fresh air.

From first-time buyers to those looking for an upgrade, luxury properties are on the radar of all potential buyers. The luxury property market has seen a surge in buying interest from both the rich and the upper-middle class. Luxury market is typically independent of market dynamics. Buyers buy luxury homes because they want them. They do not buy because prices have dropped or because there are many luxury home options.

This explains the surge in demand for luxury homes during the pandemic time. Affluent individuals had more money to spend but with vacations and other luxury activities on hold, many decided to invest in luxury real estate. The wealthy either upgraded to a better home or bought second-homes. The point that many miss is that market dynamics simply do not decide the price of a luxury property.

Demand for luxury homes is not guided by prices. Luxury homes are very individual properties, with unique features, and a higher price tag. They are usually in a prime location with a higher square footage area, luxurious amenities, and have plenty of greenery or offer beautiful views. Size of the property, location, materials used and the reputation of the project management company decide the price of a luxury home. It is not an exaggeration to say that luxury homes will always be available at a premium.

For buyers looking to buy luxury homes, there is no better time than now. Luxury home prices will always remain the same, irrespective of fluctuations in demand. The best time to buy will always be when you desire a luxury home.

(By Abhishiekh (Andy) Andlay, founder of Andlay Estates)

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