India’s Premium Real Estate–a Win for Buyers, Builders, and Investors

India's real estate sector is experiencing a luxury revolution, well-positioned to meet the escalating demand for opulent living spaces. Plush homes with exclusive facilities are in high demand due to higher disposable incomes, growing neo-middle-class aspirations, and affluent purchasers and investors seeking opulent amenities in large layouts with architectural splendor. According to a CBRE report, sales of homes priced above Rs 4 crores saw an impressive 75% growth in 2023, driven by positive housing sentiment and robust buyer confidence. This significant increase has led to the market share of luxury homes doubling.

Furthermore, the luxury housing segment outperformed the affordable sector in the first half of 2024. ANAROCK reports that luxury homes priced over Rs 1.5 crores accounted for 25% of residential sales across the top seven Indian cities during Q1 2024. This optimistic outlook is encouraging builders to launch numerous high-end housing projects to cater to the needs of buyers and investors. With the increasing launch of stunning penthouses, independent homes, and sprawling villas in gated communities amidst lush greenery, India has emerged as a prime location for luxury living.

Homebuyers Hankering for Premium Housing

The growing affluence of Indian Millennials and their lifestyle aspirations are driving them to seek premium residences in prestigious locations as status symbols. For this demographic, high-end homes with abundant amenities—such as spa facilities, yoga decks, sports zones, parks, serene pools, clubhouses, and open spaces amidst lush surroundings—have become essential rather than optional add-ons.

High-net-worth individuals (HNIs) and ultra-high-net-worth individuals (UHNIs) also prefer premium homes in posh neighborhoods for their privacy, exclusivity, and the unique lifestyle these properties offer. The trend of owning diversified real estate portfolios is rising among affluent Indians. According to India Sotheby's International Realty Survey, 83% of wealthy Indians own multiple premium properties.

Non-residential Indians (NRIs) are equally attracted to India's premium housing market due to the availability of international standard homes and the appreciation of the dollar against the rupee. A JLL report states that NRIs invested $13.1 billion in India's luxury real estate sector in 2023. By 2025, this category is expected to account for 25% of all real estate investments in the country.

Investors Exploring Premium Properties

Affluent Indian investors are increasingly channeling their capital into premium real estate, primarily seeking capital gains. While ready-to-move residences are popular, there is a growing preference for investing in premium plots in prominent locations. These plots offer long-term investment opportunities, portfolio diversification, and the potential to generate multigenerational wealth.

The flexibility of premium villa plots for future development further enhances their appeal as a desirable asset class. According to ANAROCK, land deals rose by 14% in the fiscal year 2023-24. In FY24, over 2,252 acres of land transactions are anticipated for residential, township, and plotted projects across the country.

Big Bets by Big Spenders

The India Sotheby's International Realty Survey 2024 reveals that 43% of surveyed ultra-high-net-worth individuals (UHNIs) and high-net-worth individuals (HNWIs) are looking to consolidate their portfolios by investing in premium, rent-yielding assets. Additionally, around 71% of affluent Indians plan to invest in real estate within the next two years. The survey highlights that capital appreciation will motivate 44% of HNWIs to purchase luxury homes in the near future. NRIs are similarly enthusiastic about investing in high-end real estate, aiming to generate long-term gains, increase their wealth, earn rental income, and maintain connections to their home country.

Premium real estate also offers a significant hedge against inflation and economic volatility. Traditionally, real estate has been a stable and appreciating asset class. With India’s ongoing economic development, the value of high-end properties is expected to rise further, making them an attractive investment opportunity.

Investor Confidence Driving Developers to Launch Uber-Luxury Projects

India's real estate developers, buoyed by strong market momentum, are significantly ramping up their operations and expanding their portfolios to include ultra-luxury projects priced between Rs 3.5 crore and Rs 45 crore. This expansion aims to cater to investors seeking extravagant living spaces.

In response to evolving customer preferences, developers have revamped their project launch and marketing strategies. They are partnering with renowned architects, interior designers, and landscape artists to create iconic living spaces that are akin to works of art. According to JLL, 159,455 residential units were launched in the first half of 2024. While most of these projects were upper-mid segment residential units priced between INR 1-3 crores, there has been a notable increase in the share of premium and luxury segments compared to the same period last year. New launches in the premium segment accounted for about 12%, with ultra-luxury projects making up around 6%.

The Future of Luxe Living in India

India's premium real estate sector is poised for significant growth, driven by a fusion of experiential luxury, cutting-edge technology, and sustainability. As the market evolves, it will continue to offer unparalleled opportunities for both investors and homeowners. With a focus on holistic living, innovation, and eco-friendly practices, the future of luxury living in India promises to be both dynamic and extraordinary. It is a golden era for India's high-end property market, and the best is yet to come!

(This article is authored by Srinivasan Gopalan, CEO ArisInfra Solutions Ltd.)