Unravelling The Rise and Shine of Indian Luxury Housing

Indian Luxury Real Estate is a Flourishing Market in 2023 & Beyond

In the first nine months of 2023, the top seven cities in India witnessed a significant uptick in luxury housing sales. This surge marks a remarkable recovery and growth in the luxury real estate sector, driven by various factors.

Growing Appetite for Opulence: The Demand Dynamics

Reports indicate a steady increase in the demand for luxury homes over the past few years, with a brief setback during the 2020 pandemic. Anuj Puri, chairman of Anarock Group, revealed that out of approximately 3.49 lakh units sold in these cities, around 84,400 were luxury homes priced above Rs 1.5 crore, accounting for nearly 24% of total sales.

The Economic Engine of High-Value Sales

Ritesh Mehta, senior director at JLL, explains the multifaceted impact of luxury housing sales:Higher Profit Margins - Luxury segments offer significantly higher profit margins – about Rs 2,000-2,500 per sq ft, compared to Rs 800 in mid-segment housing. This higher profitability helps developers offset losses in other market segments.

Stability Amidst Uncertainty:

High net-worth individuals and investors, typically the buyers of luxury homes, have more stable financial situations. During economic downturns, like the pandemic, the luxury market's resilience provided a cushion to the real estate sector.

Spillover Effect:

Luxury developments often lead to enhanced amenities and infrastructure in surrounding areas, boosting the market appeal of all housing segments. This includes the development of commercial real estate, such as shopping complexes and entertainment hubs.

Prestige and Branding:

Luxury properties enhance the real estate market's image with their grandeur and exclusivity. They also showcase industry capabilities through cutting-edge design and innovation, promoting market-wide growth.

Forecasting the Future of Luxury Real Estate

Gorakh Jhunjhunwala, MD of Meraqi Advisors Pvt. Ltd., predicts a bright future for luxury real estate. The segment is expected to register a CAGR of over 5% between 2023-2028, with a substantial 40% revenue growth. The demand for ultra-luxury homes is also on the rise, reflecting changing consumer needs and preferences.

Changing Consumer Sentiments

Anarock Research's consumer sentiment survey underscores this trend. Only 9% of respondents preferred buying luxury homes in the first half of 2019, which increased to 16% in the first half of 2023. This shift signals a growing interest and demand for luxury real estate.