Publication: Digital First, 5th May 2021
Nishit Jalan is an industry leader with a demonstrated record of driving innovation and delivering constructive business results. He is the driving force behind the venture and manages the purchase, construction, and sale of projects. Erudite with a stellar academic background, Nishit has completed his BTech in Mechanical Engineering from BITS Pilani. Earlier, he worked in a multinational engineering firm Norfolk mechanical. Over the years, Nishit played a pivotal role in the growth of Grovy India, making it a renowned real estate platform.
Real estate is one of the fastest growing sectors around the world. According to IBEF, by 2040, the real estate market is expected to grow to US$9.30 billion from US$ 1.72 billion in 2019.
The growth is complemented by the rise in income and constant desire to buy better residential, commercial and hospitality spaces. Talking about luxury real estate, over the last couple of years, the segment has witnessed significant growth in demand due to a rise in the number of high net worth individuals. According to the Wealth Report 2021 from Knight Frank, at present, India is home to 6,884 ultra-high net worth individuals and 113 billionaires. The number is expected to grow to 11,198, a rise of 63% in the next five years. These statistics indicate the potential, luxury housing holds.
With a sudden wave of relocations and low mortgage rates, the real estate market was on fire in 2020. Moving forward, various trends are expected to drive the real estate market in 2021. Let’s have a look at them especially for the luxury real estate segment.
Real Estate Market in 2020
The commercial and housing market is considered as a significant indicator of economic growth by economists. From the investor point of view, it is considered as a healthy market for investment – obvious from real estate signage all over the neighbourhood.
The real estate market among many others was hard hit by the pandemic in 2020. Though there was a mass exodus of people amidst lockdown and work from home, the prices hit a low due to layoffs, salary cuts and shut down businesses. But the government has been quite pro active in reviving the market and helping the people seeking to invest. Some important initiatives by the government include higher tax breaks, lower interest rates on home loans and a stress fund of Rs 25,000 crore for stuck projects. Also, the market started recovering in the second half of 2020. As per PropTuger.com, developers sold 35,132 units during Jul-Sep 2020, a significant increase of 85% from the previous quarter.
Further, with impressive growth in online demand, there has been increasing digitisation of real estate. Online booking platforms, virtual tours, drone shoots and video calls for project short listing are common trends among buyers and developers. It can be said that 2020 was a year of revolutionary change in the real estate market as technology continues to play an influential role in property buying, registration and renting. Talking about millennials, their values and preferences continue to evolve and when it comes to investing in property especially residential, they want luxury house ownership. This is because they prefer proximity to nightlife and entertainment and also, the ability to socialise in communal areas.
Luxury Real Estate in 2021
Luxury real estate is one such segment that attracts everyone and also, a hidden dream of many. After all, who doesn’t want to own a beautiful house at a posh location with all advanced facilities? Every luxury buyer has different preferences for the property of his dreams. According to Sotheby’s International Realty’s 2021 Luxury Outlook Report, the most important facilities for luxury buyers today are nearby parks or private outdoor space and additional square footage for remote work & education.
The report also highlights a significant trend among high net worth individuals who are investing in large compound-type properties. These properties are usually second or third homes where multi-generational families can gather safely with lots of room for individual privacy.
Further, the following are the trends that are structuring the growth of luxury real estate:
- Growing Interest in Second Homes
Luxury buyers are increasingly on the lookout for second homes – farmhouse at countryside or picturesque properties in holiday destinations. Holistic living has paved the way for investing in a luxurious second home.
Second-home destinations are also becoming popular amidst permanent work from home or work from anywhere. Certain locations like Goa, hill stations, Alibaug etc. are hot favourites of the luxury buyers with their exceptional offerings of favourable weather conditions, modern architecture style villas, easy connectivity and better AQI.
An increasing number of buyers are seeking properties in elite neighbourhoods and tier-1/metropolitan cities. Bungalows and spacious apartments at these prime locations will continue to be the favourite choice of luxury buyers.
- Advantage NRI
The increasing interest of NRIs in Indian real estate is a significant factor that will continue driving luxury real estate in India. Many factors such as growth prospects of real estate in India coupled with value depreciation of the Indian Rupee American Dollar has piqued the interest of NRI.
- Low Interest Rates
Interest rates for housing loans are at a historic low which allow for considerable savings and also, an option to raise the loan amount. This broadens buyers’ choice for a more luxurious property.
All in all, 2021 will be a strong one for high value property transactions. We will see more luxury properties coming up with advanced technologies, modern equipment, classic architecture and fancy furniture.