The customers in the luxury segment in real estate are mostly the affluent people. This segment has stayed firm and promising without a trace of a slowdown in the last few years. More than the property price, the focus of the affluent customers in this segment lies in location, amenities, the niche provided and so on.
The developers predict that with the latest cut in GST rate, the demand will rise further. On the other hand, the mid-level properties are having a hard time due to a huge unsold inventory, which is not witnessed in the luxury segment due to the limited quantity of construction in the high-end segment. Various developers have stated that although there was a slowdown of demand during the last few months for under-construction properties, including the high-end market, because of the wait and anticipating cuts in Goods and Services Tax (GST) from 12 per cent. However, after the rate cut, the interest has returned on the track.
A report to the IANS by a Developer stated, "People stopped buying for a very short term, looking for clarification on GST and that is the only reason why the demand was low and since now the clarification has come and rates are reduced, it has been a booster to the luxury demand". The experts say that the demand for high-end property has been steadily rising. The luxury properties are mostly built in the metros where the growth of businesses and the entrance of multinational companies have added to the factor of sustained demand. A lot of buyers in the segment purchase properties to investor secure their funds to liquidate the property in future. Therefore, the trend of investing in high-end properties is on the rise among affluent Indians.
The IANS report further added, "A luxury property creates a much higher incremental value in comparison to a product in the mid-segment. For example, if the price in the mid-segment grows from ₹ 5,000 to ₹ 8,000 per square feet over a period of 5 years, during the same period, the price of a luxury property would have risen from ₹ 15,000 per square feet to ₹ 25,000-30,000 per square feet”.
A lot of people in the country including politicians and businessmen have bought luxury property primarily for investment purposes. The domestic luxury realty market is also a favoured destination for the non-resident Indian (NRIs) in terms of investment, consisting of around 35 per cent of the investment done by NRIs. The freedom, possibility, affordability and will to travel across countries have made people today well-informed and aware of the luxury offered. The top ranking markets offering luxury homes in India at present are Mumbai, Delhi, Bengaluru, and Pune. Experts credit this trend and increasing demand for the luxury residences to the transparency brought by the Real Estate Regulatory Act (RERA) and the GST. Such kind of policies will always work in favour of the Industry as well as the country.