Home truths: Luxury real estate looks set to retain its sheen this year

  • Kunvarji Realty
  • 25/01/2024
  • 55 views

Home truths: Luxury real estate looks set to retain its sheen this year

Source: Business Standard

There is money in the air – whether it’s the vast expanses of land lining the national highways in the capital region or the bustling pockets of cities that seem to mint wealth by the minute. Luxury real estate, in particular, has been a magnet for affluence.

For the sector, the year started on a high. Barely a week into 2024, several national dailies featured a full-page advertisement by realty giant DLF, announcing, “We are sold out.” DLF had managed to sell 1,113 luxury apartments in Gurugram for approximately Rs 7,200 crore within three days of the pre-launch. Meanwhile, Tribeca Developers, known for its Trump-branded realty ventures worldwide, forged an agreement with the Tejukaya Group to develop a luxury residential project spanning 2.5 acres in Parel, South Mumbai. This will be Tribeca's first foray into Mumbai. Sales in the luxury housing segment across the top seven cities have grown from 8,301 units in 2020 to 119,130 units last year, according to a report from real estate consultancy Anarock. A record 100,355 units were launched in 2023, constituting around 23 per cent of the total units available.

The real estate landscape has undergone a significant transformation in the last decade, said an executive from a leading realty developer who preferred to remain anonymous. Previously, smaller players dominated the residential market, but now larger brands take precedence. For instance, DLF has curated a comprehensive living experience in Gurugram, encompassing tech parks, townships, malls, and more, the executive said, highlighting a similar scenario with Hiranandani in Powai, Mumbai.

While the affordable segment continues to drive the real estate sector, the premium and luxury housing segment units priced at Rs 2 crore and above witnessed robust sales growth, registering a 70 per cent year-on-year increase in the January-September 2023 period, real estate consultancy firm CBRE Group reported.

Low home loan interest rates, favourable government policies, and the fear of missing out on desirable properties across metro cities contributed to this growth in sales.

Prashant Thakur, research head, Anarock Group, attributed this surge to the long dry spell before the Covid-19 pandemic. Low home loan rates and pent-up demand are major reasons for the increase in sales in this segment,; Thakur said, noting that this buying spree resulted in a strong cash flow for most developers, leading to the launch of more such projects.

Government's tax adjustments, including revised circle rates in New Delhi and stamp duty cuts in Maharashtra, also played a role in this growth. In response to the downward trend in the state's realty market, the Maharashtra government announced a duty cut of 2-3 per cent down from 5. This acted as an incentive for high-end buyers to start looking for a lifestyle upgrade.

When one is looking for options in the upper end of the market, a 3 per cent stamp duty cut can be equivalent to the cost of a mid-level car,; said Gulam Zia, senior executive director, Knight Frank.

Historically, the luxury segment barely reached double digits, but in 2023, the market grew by around 41 per cent compared to 2022, Zia added.

Niranjan Hiranandani, founder and managing director of Hiranandani Constructions, concurred. In my career of 40-plus years, this is the first time I've seen the mid-level and luxury segments growing faster than the affordable one. Hiranandani noted that the buyer class is driven by aspirations, with individuals in one-BHK flats seeking two- or three-BHK flats.

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The information, details and specifications about the projects on this site are as provided by the developers and/or sellers to the best of our knowledge and it is advisable that the same be verified by the respective buyers & sellers. Kunvarji Realty Brokers is not a developer. Rates are indicative and subject to change without prior notice.
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