India’s real estate sector is currently at the cusp of an exciting transformation. In the recent past, the transformation policies and taxation reforms have brought a paradigm shift in the real estate sector-especially the residential segment-making it more organised and transparent.
These policy initiatives have renewed interest of all property seekers who are in a search of buying affordable and luxury properties in India. Now, India is also expected to witness a strong rise in the demand for luxury projects. More and more property buyers have begun demanding attractive interiors, high-quality features and world-class amenities in their homes, supported by technology and innovation, while investors from around the globe have developed an interest in the luxury segment. We look at some reasons that revived Indian luxury real estate sector:
1. NRIs are buying luxury homes for rental income
Indian real estate sector has always been one of the most favorite investment asset class for Indians as well as NRI investors who buy property for rental income.NRI investors have an advantage in the luxury segment in India after the recent demonetisation move as realty developers have "significantly" dropped property rates across various cities in India.
According to Hari Mohan Sharma, Director -Strategy, Clicbrics. “Due to the transformation policies like RERA and GST post demonetisation has brought a paradigm shift in the real estate sector, bringing in the much-needed transparency and accountability into the sector. It has given a boost to global investors’ confidence for investing in Indian real estate sector.”
On a pan-India basis, nearly one-fourth of the luxury real estate market of India was dominated by NRI investors in FY 2018. Until 2013, 20% of the luxury properties bought by NRIs’ in India.NRI investors with higher purchasing power are stoking the demand for luxury properties, as they offer better rental income as well as capital appreciation.
2. GST reduction propels the demand for the luxury segment
In an attempt to revive housing sales especially high-end segment homes in India, reduction in the GST was a much-required step. Earlier, homebuyers were reluctant to indulge in an under-construction luxury property purchases due to high GST. Luxury housing is largely catering to the high-end investors and 1% GST doesn’t burn their hole in the pocket.
The rise of the new multinationals
As per reports, due to the rise of multinational companies and businesses over the past few years, the demand for the luxury home in India is steadily rising. This has led to constant demand from well off in society who prefer living in high-class homes in key locations, loaded with state-of-art amenities. Key cities in India witnessed a supply of around 12,090 units in the luxury segment during 2018, with maximum supply being in Mumbai Metropolitan Region (MMR). This was 6,310 units in MMR followed by NCR with 2,650 units.
In the present market conditions, the luxury segment has evolved at a rapid pace in India not only due to factors such as better rental income and capital appreciation but also because of enhanced transparency and standardised due diligence system. With the reviving economy, the luxury real estate sector shows the signs of positive growth in the coming years.