Rise of Luxury Properties
New Delhi [India], November 27: The realty market in India has been witnessed to transform radically over the past few years, with luxury housing emerging as one of the most dynamic and promising segments. The demand for high-end homes has been fueled by a blend of economic growth, changing lifestyles, and increasing interest from global investors. In this article, we present growth trends, drivers, and financial implications of such booming markets, with an emphasis on how financial tools, in this case, home loans, are opening up such premium properties for access.
Real Estate: Rapidly expanding market
Luxury real estate in India has seen unprecedented growth that has risen to the definition of properties priced above ₹1 crore. According to the data from January to September 2024, sales for homes priced above ₹4 crore have grown by 37.8%. This has added up to nearly 12,625 units sold as against 9,160 units in the same period of 2023.
Well, interestingly, luxury housing now forms 41 per cent of total sales in the Indian housing market, up from 33 percent in 2023. The growth is most pronounced in metropolitan cities like Delhi-NCR, Mumbai, and Hyderabad that collectively accounted for 90 percent of such high-value deals. Cities like Pune and Bengaluru are also catching up, with a considerable promise for them as emerging luxury hubs.
What are the growth drivers?
1. Shift in Buyer Preferences
The pandemic has refocused priorities on the home as a multifunctional space. Customers now look for larger homes built with high-end home offices, smart technology, private gardens, and wellness spaces. Thus, there has been a significant increase in demand for luxury properties in urban and semi-urban pockets.
2. Contribution by NRIs
Non-resident Indians (NRIs) are major players in the luxury housing market, driven by favorable exchange rates and a desire to maintain strong ties with India. NRIs accounted for a significant portion of purchases in 2024, focusing on high-end properties in Delhi-NCR, Mumbai, and Bengaluru.
3. Developer Innovation
To meet the increasing demand, leading developers have come up with innovative offerings that combine luxury with sustainability. Features such as designs for energy-efficient buildings, use of eco-friendly materials, and integrated technologies feature as standard features in new projects.
4. Disposable Income
India's wealthy, rising middle and upper classes are investing their increasing disposable income into real estate. There is already a rise of 12% in households earning over ₹2 crore each year in the last decade contributing to uptick in luxury housing sales.
5. Financing the Dream
Where the luxury housing of yesteryear was confined to ultra-high-net-worth individuals alone, the commodity now benefits a wider audience thanks to bespoke financial products. Among the key housing finance companies is Bajaj Housing Finance, which has flexible loan options for home loans tailored specifically to high-value properties. They enjoy competitive interest rates, longer tenures for the loan, and also personalized repayment options.
Besides Bajaj Housing Finance and other financial institutions, there are also banks offering home loans with lucrative interest rates and flexible tenure. You must compare all your options before making your decision.
However, it is noteworthy that these flexible terms and other offers are making home loans accessible to people and also propelling the achievement of owning a luxury home.
What are the regional hotspots?
Sales of luxury housing have followed mixed trends in cities:
· Delhi-NCR: The region saw a remarkable 72 per cent growth over Q3 2023, selling 2,590 units against 480 units.The trend is led by ultra-premium projects in pockets like Gurugram and Noida.
· Mumbai: India's financial capital again held its ground by selling 1,280 luxury units in Q3 2024, up by 18 per cent compared to the previous year. Suburbs like Bandra and South Mumbai continue to be major hubs.
· Hyderabad: Known for its relatively affordable luxury options, Hyderabad sold 200 units in Q3 2024. Areas like Banjara Hills and Jubilee Hills are popular among buyers.
· Pune and Bengaluru: Emerging as promising markets, Pune saw 810 luxury homes sold in 2024, while Bengaluru’s real estate benefited from growing interest in tech-friendly developments.
Understanding the Economic Context
The luxury housing boom is part of a broader trend in India's economic development. Rising GDP, urbanization, and a focus on infrastructure development have increased the confidence of the buyers. However, along with these are challenges such as increased property prices and global economic uncertainties, which pose risks.
Between July and September 2024, property prices in prime locations gained 3% to 50% depending on the area. The increase has caused some buyers to delay purchases while still maintaining strong overall demand.
What is the market outlook?
Experts foresee further growth in the luxury housing segment in a future which will be driven by high-income groups and foreign interest. CBRE South Asia reports that luxury housing will see 20% annual growth till 2026, supported by a pipeline of premium projects across top-tier cities.
Interestingly, mid-range cities, such as Ahmedabad and Chandigarh, are also expected to be busier in this segment.Developers are discovering such areas as an untapped market with a lot of growth potential.
Is technology playing a role?
Technology is changing the way luxury real estate is marketed and sold. Virtual tours, AI-driven suggestions for property purchases, and blockchain-based transactions are transforming the buy process to be more transparent and buyer-friendly.
Moreover, proptech startups are creating platforms that allow buyers to explore properties remotely, conduct due diligence, and even complete purchases online, reducing the dependency on physical site visits.
What are the challenges ahead?
Despite its promising trajectory, the luxury housing market faces challenges:
· Inventory Overhang: Unsold inventory remains a concern, particularly in cities with rapid new launches.
· Global Economic Trends: Fluctuations in global markets, including rising interest rates, could impact buyer confidence.
· Regulatory Barriers: Delays in approval of projects and changes in tax structures can help deter developers.
Conclusion
India's luxury real estate market is an interesting study of aspiration meeting opportunities. The segment is growing due to the changing buyer preferences, technical innovation, and supportive financial products. Now, entering 2025, the marketplace would redefine luxury living by upgrading the experience to make it more accessible and aligned with the modern lifestyle.
It is the perfect time for aspiring buyers to explore this dynamic segment.
Disclaimer: This article is published in association with Creditdharma and not created by TNM Editorial.