Where is the luxury high-end residential real estate market headed? These buildings are concentrated mainly in metros. Will the trend continue or there will be a slowdown in this specific area of the real estate sector?
In the recent years, Indian real estate market has had several ultra-luxury projects. India’s ultra-high-net-worth individuals have shown a keen interest for expensive and luxurious housing. A house in a coveted locality is not enough. The house should have the perfect balance of high standard of living and premium quality of amenities.
There is over a 100% rise in ultra-luxury projects. During the year 2007-11, there were 5,870 units that were launched. Post 2012 it has been noticed that about 11,819 ultra-luxury projects have been already launched. Gurgaon, Mumbai and Bengaluru have witnessed the maximum number of ultra-luxury projects. Key luxury housing markets have witnessed steady appreciation in prices over the last few quarters.
As per a report by Ernst & Young and Kotak Wealth Management, the number of ultra high net worth individuals in India, which was 1,17,000 in 2013-14, is projected to nearly triple to 3,43,000 by 2018-19. Industry reports estimate that close to 40% of the Indian luxury consumers are living outside of metros. Increase in income, lifestyle standards and accessibility and availability of luxury brands in the country have changed the face of the luxury in India. Apart from the metros, cities like Bangalore, Chandigarh, Gurgaon plus tourist destinations like Goa, parts of Himachal, Kerala etc. especially from the point of view of the second home market are witnessing gradual increase in luxury housing market. We estimate that over the next 15 years, there will be a need for 1.5 million luxury homes in India. The Indian millionaires and billionaires look to invest in luxury homes, both for themselves and for their children thereby increasing the numbers.
Outside of metros, the cost of living is low, while income might be high. This means that their disposable income is higher than in the metros, such individuals will be looking to purchase luxury properties within their city. With the growth of such individuals, we see the demand increasing more outside the metros.
