Luxury house across the country have recorded the highest average price appreciation of 24 percent in the last five years, a report by Anarock Research showed.Average prices of homes priced more than Rs 1.5 crore in the top seven cities saw the highest appreciation.The seven cities include the National Capital Region (NCR), Hyderabad, MMR, Bengaluru, Pune, Chennai and Kolkata.Among these top seven areas, Hyderabad recorded the highest jump of 42 percent in the average price of luxury homes.At 19 percent, NCR saw the highest average price jump in this category.
The expansion of the Indian economy and the introduction of various business models such as technology, venture capital, social media and start-ups has resulted in a new class of wealthy individuals with significant purchasing power. Due to this, there is a boom in the luxury segment in the real estate market.The growing demand for luxury houses across cities in India can be attributed to a combination of economic, social, and cultural factors. Here are some reasons why luxury houses are experiencing greater demand.
Rising Disposable Income: India has been experiencing steady economic growth, resulting in an increase in disposable income for a significant portion of the population. As people’s incomes rise, they become more capable of affording luxury properties.
Urbanization and Aspirations: Rapid urbanization has led to a shift in lifestyle and aspirations. As more people move to cities for better opportunities, they aspire to match their lifestyle with international standards, including the kind of housing they live in.
Status and Prestige: Owning a luxury house is often seen as a status symbol and a demonstration of social prestige. In Indian culture, where social standing is important, a luxury property can enhance one’s reputation.
Nuclear Families and Changing Lifestyles: The trend of nuclear families and changing family structures has led to an increased focus on personal space and amenities. Luxury houses often come with larger living spaces and better facilities, catering to these changing lifestyles.
Foreign Direct Investment (FDI): The Indian real estate market has attracted significant foreign direct investment, leading to the development of high-end residential projects that cater to the demand for luxury housing.
Improved Infrastructure: Many Indian cities are experiencing improved infrastructure, including better roads, transportation, and connectivity. This enhances the livability of luxury properties in prime locations.
Global Exposure: Increased exposure to international lifestyles through travel, media, and the internet has influenced the preferences and aspirations of Indian consumers. This exposure often includes an appreciation for luxurious living.
Growth of High-Net-Worth Individuals (HNIs): The number of high-net-worth individuals in India has been growing, and these individuals are more likely to invest in luxury properties as part of their investment and diversification strategies.
Luxury as an Investment: Luxury properties are often viewed as stable investments that can provide both capital appreciation and rental income. As a result, investors often seek out luxury real estate to park their funds.
Gated Communities and Lifestyle Amenities: Luxury houses are often part of gated communities that offer not only high-quality residences but also a range of lifestyle amenities such as gyms, pools, parks, and security services.
Cultural Significance: In India, homes hold cultural significance, often being considered a reflection of one’s achievements and a place to celebrate festivals and milestones. As a result, people are willing to invest in luxurious spaces for these purposes.
Low Interest Rates: Favorable lending rates provided by financial institutions can make it more attractive for individuals to take loans for purchasing luxury properties.
It’s important to note that while luxury housing demand is growing, affordable housing remains a critical need in India, and efforts are being made to address this issue as well. The reasons listed above provide insights into why luxury housing is gaining demand, but the real estate market is influenced by a complex interplay of various factors.