Feature

Realty Gets A Luxe Push

A post-Covid rebound in the economy and NRIs are pushing the sale of luxury properties in metros as well as smaller cities 

Grand views, seven-star amenities, stylish décor, expensive fittings and neighbours who are people like us...luxury homes offer these and more. And there is a rush to buy properties that cost more than the average man’s lifetime savings.

“This place matches our family’s lifestyle. We bought it knowing that it would offer the perfect environment to relax, enjoy and spend time with the family,” says Rohit Mutha, a chartered accountant and owner of a 4,600-square-foot, 4-BHK apartment at Amar Landmark, Pune.

Apartments at Amar Landmark go upwards of a few crores. 

The allure of luxe, however, is just not a lifestyle choice; it is also a   sensible investment option. Nandan Mathur (name changed on request), a C-suite executive has invested in M3M Heights in Sector 69, Gurgaon. The project has a breathtaking view of the Aravalli range and an exclusive five-star clubhouse of 1,00,000 square feet.

“I want my house to be secure, have world-class amenities and super in-house maintenance. Luxury houses offer at least 3,000–3,500 square feet of space. Even if I want to rent my houses these luxe ones make sense as tenants are willing to pay higher rents,” he says.

Luxury real estate has seen a bump in recent times. CRE Matrix, a real estate data analysis platform, says that there has been a year-on-year increase in primary sales of luxury property priced Rs 5 crore and above in seven cities in India. The numbers have increased from 2,581 units sold in 2020 to 10,929 in 2023. Sales recorded till June 15 this year stand at 3,033 houses including villas and apartments. Last year Gurgaon recorded the highest sales in this segment with 3,713 units being sold across four quarters.

A report by Anarock, a real estate services company, says that 2023 saw a staggering 247% yearly surge in terms of total sales value of ultra-luxury homes against the whole of 2022. Speaking to Outlook Business, Anuj Puri, the company’s chairman, says: “The demand in this segment is positive and will continue to grow as it is driven by buyers with higher disposable incomes who want and can afford affluent lifestyles.” 

Haute Homes 

So, what makes a home luxury? The sticker price for one. Catering to a niche, luxury and ultra-luxury housing can be priced upward of Rs 5 crore and may touch Rs 100 crore, depending on the location and amenities offered. “One city’s luxury is another city’s affordable and should be put in context,” says Ankita Sood, director and head of research, growth and marketing, REA India, a full stack real estate technology platform that owns Housing.com, Makaan.com and PropTiger.com.

For instance, in February 2024, a 10,000-square-foot apartment at The Camellias by DLF in Gurgaon sold for Rs 95 crore whereas a luxury villa in north Goa by the House of Abhinandan Lodha by the name of One Goa is priced at Rs 73-lakh-plus. DLF and Lodha are leading real estate developers.

“Over the past 10 years the stock markets have performed well; the rich have become richer. Because of Covid those associated with pharma made money. Our start-up founders too became richer. All these people have bought luxury real estate,” says Abhishek Kiran Gupta, founder of CRE Matrix.

In a statement in the Rajya Sabha in February, the finance ministry said that there were 2.16 crorepati income tax filers in 2022–23.

Buying and Belonging

Non-resident Indians (NRIs) are the new cohort that has chipped in with their dollars. For them it is god’s gift as the dollar has appreciated against the rupee.

Anaya Nair (name changed on request) and her husband have been living in New York since 2011. During the past 13 years she has been visiting Kochi, her hometown, to meet her parents. Over the years she has seen infrastructure and real estate becoming better in the city.

“We may spend our retirement here. Kochi offers us a comfortable stay. We are looking to invest in a luxury housing project in the Marine Drive area. Our budget is Rs 5–6 crore,” she says.

Luxury housing stands to gain a lot from investments by NRIs. One of the prime reasons that has instilled confidence among these buyers is the Real Estate (Regulation and Development) Act, 2016—(RERA)—which came into effect in May 2017.

Mandatory registration of projects, compulsory disclosures by developers, maintenance of escrow account, transparency around carpet areas in both advertisements and sale agreements, timely completion of projects and compensation to buyers in case of delays along with buyers protection and grievance redressal have helped in assuring NRIs that their investments in real estate are safe.

Added to these are Reserve Bank of India guidelines, which permit NRI homebuyers to draw up to 80% of the total amount required for property purchase as loans, have also been useful in attracting these investments. NRIs have the option to make real estate purchases through non-resident external as well as non-resident ordinary accounts in authorised banks.

Earlier this year DLF sold 1,113 luxury residences in Gurgaon in three days. A quarter of these were bought by NRIs.

Aakash Ohri, joint managing director and chief business officer, DLF says that NRIs are investing with plans to return and settle down in the future.

Other key drivers are lower home loan interest rates, favourable exchange rates, digitised processes and transparent regulations. While there is demand across various geographies and product categories, there is particularly strong interest in luxury homes.

High-rise luxury condominiums in cities like Delhi and Gurgaon have traditionally been popular among NRIs. Since the pandemic, there has been an increased interest in luxury homes within driving distance of metros and in offbeat destinations such as Kasauli, Panchkula, Kochi, and Goa.

“Over the past two financial years, the contribution from NRIs has grown from 5% to 24%. For any new project, we keep our NRI sales inventory to about 25% to ensure that they receive a fair share. In three of the recent DLF marquee projects those sold out before formal launches,” Ohri says. 

Sectoral Boom

According to CBRE South Asia’s recent report Indian Market Monitor in Q1 2024, there has been an increase in new launches in luxury category—a remarkable 64% year-on-year increase in 2024. However, the ready-to-move-in inventory or nearing completion projects constitute only 20%-22% of the total stock.

This boom in the real estate industry has come after a period of sluggish demand. In 2016 demonetisation took Rs 500 and Rs 1,000 currency notes out of the market and cash was a major component in real estate purchases. Some developers defaulted on delivering projects. Inflation, higher interest rates and increased cost of funding had crimped supply. 

The wheel has turned, and housing has gone back to being demand driven. Luxury and ultra-luxury projects have also hit the sweet spot with builders as these projects deliver a higher margin of profit. Caps on capital value, high cost of land and materials have meant that building luxury homes ensure better returns for the developers when compared to other segments of housing.  

While there has been a rise in overall sale of residential property across all categories registering an 8% year-on-year growth, sales of luxury homes ranked fifth among other segments of housing, according to a report by credit-rating agency CRISIL. The report went on to predict that launches in affordable segments are expected to remain muted in the coming year. 

“India is now recognised as an attractive destination. The continuation of broad policy frameworks and infrastructure development by the returning government will strengthen the upward trends in real estate,” says Anshuman Magazine, chairman and chief executive, India, Southeast Asia, West Asia and Africa, CBRE, a real estate firm.