Reflecting on India’s soaring economy, the annual Luxury Outlook Survey 2024 by India Sotheby’s International Realty (ISIR) has uncovered a noteworthy trend among the country’s affluent elites. According to the survey, a staggering 71% of India’s wealthiest individuals are showing keen interest in investing in luxury real estate. This trend is defying the odds of a nearly 40% rise in property prices over the last 2 years and an increase in mortgage rates.
Conducted among High-Net-Worth Individuals (HNIs) and Ultra High-Net-Worth Individuals (UHNIs), the survey reveals robust economic optimism with 79% expressing confidence in the positive trajectory of the Indian economy for 2023-24. This is a remarkable increase from 59% recorded in the previous year. This optimism shows that, despite the challenging real estate market conditions, a significant majority of respondents are expecting lucrative returns from real estate investments in the next couple of years.
Capital appreciation has become the driving force behind this renewed interest in luxury real estate as 44% of respondents cited it as primary motivation. This shift signals a return of investors to the market who are focusing on long-term wealth creation. According to the International Monetary Fund, “India is shaping its destiny far more confidently than ever before.” The international agency predicts India to ascend to the third position as the largest economy from its present fifth position by 2027. The Reserve Bank of India also pegged a GDP growth guidance of 7% in 2024.
As the economic momentum is translating into record-breaking housing sales in 2023, India Sotheby’s International Realty anticipates that the top end of the real estate market will reap the most significant benefits in the coming 12-24 months.
Goldman Sachs Group Inc. predicts a near doubling of the affluent class to 100 million people within the next three years. This increase in ultra-wealthy individuals will be attributed to robust startup ecosystems and a growing number of industry unicorns. It indicates a shift in economic sentiment towards real estate as an investment channel for long-term wealth creation.
Amit Goyal, Managing Director of India Sotheby’s International Realty, stated, “Our Luxury Outlook survey findings indicate a renewed and heightened interest among investors who now view real estate as a compelling avenue for long-term wealth creation.” His statement reflects on real estate’s enduring value and potential for sustained financial growth.
In terms of financing outlook, 56% of HNIs and UHNIs anticipate a reduction in interest rates by the Reserve Bank of India in 2024. This paints a positive picture of mortgage and financing conditions in real estate. The survey also highlights that an impressive 83% of affluent Indians own multiple luxury properties, showcasing a trend of diversified real estate portfolios among the elites.
In addition, the survey has revealed a diverse array of real estate assets, apart from primary residences, with 34% owning commercial real estate, 25% holiday homes, 21% agricultural land, and 20% farmhouses. Notably, 35% of holiday home buyers prefer Goa, which underlines the appeal of the place’s lifestyle among India’s wealthy.
Interestingly, 43% of UHNI and HNI respondents have expressed a desire to consolidate their portfolios, focusing on better quality and rent-yielding properties. The survey has also highlighted a shift to digital mediums, with 34% of UHNIs and HNIs utilizing 3-D virtual reality and walkthroughs for property research. This shows the impact of digital transformation in the upper echelons of the luxury real estate market.
As India’s wealthiest are preparing for multi-generational wealth creation, the luxury real estate market is gaining the limelight of sustained growth and prosperity.
