An overwhelming 75% of the High-Net-worth Individuals (HNIs) and Ultra High-Net-worth Individuals (UHNIs) believe real estate will do well over the next two to three years and a similar percentage (74%) consider real estate is an important asset to hedge against inflation, revealed the annual Luxury Outlook Survey 2023 conducted by India Sotheby’s International Realty (ISIR).

Real estate continues to remain an attractive investment option with 61 per cent of HNIs and UHNIs looking to buy real estate in 2023-24. High rise apartments with 34%, closely followed by farmhouses and holiday homes with 30% are among the most preferred by affluent investors. Rent yielding commercial real estate is also in demand as 23% of the HNI respondents would like to invest in it.

Properties in the price range of INR 4 -10 crore are most preferred for HNIs with almost 65% looking for investment in that range, while 33% of HNIs and UHNIs are willing to spend upwards of INR 10 crores to acquire the right luxury property.

“Strong policies and reforms have supported India’s economic growth, making us 5th largest world economy in 2022. The ambition of becoming the third largest world economy by 2037, also looks bright. And the optimism can be felt all around, including robust demand in the housing sector. As the wealth of a nation grows, it is bound to bring in a new set of buyers into luxury real estate and that’s what we are witnessing” said Amit Goyal, CEO, India Sotheby’s International Realty.

“We all are witness to a fundamental shift in the desire for home ownership across age groups, post the pandemic. A young thriving workforce in India will continue to drive demand for the housing sector,” added Goyal.

The survey also indicates that as many as 34% of HNIs and UHNIs have indeed bought luxury real estate since April 2021 and given that finding the right property and concluding a deal in real estate takes time, ISIR believes many of the HNIs and UNHIs are still on the lookout for well-priced luxury homes.

Lifestyle upgrade remains the key motivation for buying property in 2023- 24, followed by capital appreciation. Interestingly, 12% of the wealthy also picked real estate as a chosen asset class to create multi-generational wealth to pass on to the next of kin. 

“There is no doubt that if done appropriately, real estate can be an excellent asset for wealth accumulation and an equally strong avenue to hedge against inflation and volatility of the stock market,” said Ashwin Chadha, President, India Sotheby’s International Realty.

“We also believe that Indian real estate has started its multi-year bull run in 2021, after years of remaining subdued. Prices of luxury homes have risen in the last 16 months, but they are still only marginally higher than the peak prices of 2015, making it possible for HNIs to strike well-priced deals even now,” added Chadha.

As expected, Delhi NCR, Mumbai, Goa and Bengaluru remains the top 4 cities for respondents to buy real estate. Another interesting finding is that 11 per cent of the India’s wealthy are searching for real estate in overseas destination. Interestingly, there was very little any interest in foreign properties when India Sotheby’s had conducted a similar survey at the end of 2021. With the fears of pandemic receding and the world opening up, affluent Indians are also looking at acquiring luxury apartments in gateway cities of New York, Miami, London, Dubai and Lisbon.

When asked if they would like to consolidate their real estate portfolio for a switch to higher quality property and income generation, a significant 45 per cent of HNIs and UNHIs responded in affirmation. It is worth mentioning here that HNIs and UNHI’s in India own multiple properties.

“We believe that HNIs and UHNIs with multiple properties would benefit immensely from assessing their real estate portfolio – to remove underperforming properties and switch to better quality real estate in the right locations with prospects of capital appreciation and rental income,” the survey said.

Larger homes and open green spaces combined with excellent physical and social infrastructure emerged as the top two reasons for wealthy Indians while choosing a property to buy. 

“11 per cent also picked sustainable features as one of the key reasons driving their purchase. Last year this figure was at 5 per cent. This indicates a growing awareness and availability of green, sustainable homes,” the survey found which indicates the growing awareness amongst the affluent to live a more sustainable life and better availability of sustainable homes inventory as developers switch to green offerings.

Also Read: 4.02 Lakh Homes Completed in 2022

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By Varun Singh

A large majority of the HNIs are proposing to buy property in the next two years reflecting a strong and decisive turnaround in the luxury real estate segment, revealed a survey conducted by India Sotheby’s International Realty.

The survey elicited responses from over 200 HNIs and UHNIs to gauge the mood of the luxury home buyer across India’s top 8 cities — Delhi-NCR, Mumbai, Kolkata, Bengaluru, Hyderabad, Pune, Chennai, and Goa.

Out of the 76 per cent who responded in the affirmative to buying real estate in 2022, 89 per cent said they would look to buy Residential Real Estate vis-a-vis 11 per cent who opted for commercial real estate. This translates to 67 per cent of the respondents wanting to buy luxury homes, going forward.

“An overwhelming 67% per cent of respondents said they would look to buy luxury residential real estate in 2022. On the key motivation to buy another property, 46 per cent of the respondents said, the biggest reason for them to buy property in the pandemic years was a lifestyle upgrade. About 31 per cent of HNI’s also said the biggest motivation to buy real estate in the last 18 months was ‘a good investment opportunity’, reflecting the emergence of bullish outlook that HNIs have on luxury real estate and their expectation of home prices to rise.” said Sotheby’s Luxury Housing Outlook-2022.

Within the choices of buying residential real estate, a city apartment continued to top the charts with 34 per cent saying they would look to buy a bigger city-based apartment. On the other hand, more than 1/4th of the respondents (29 per cent) expressed their desire to acquire a holiday home.

“This remains one of the biggest aspirations for the HNIs, a change we see as significant” observed Amit Goyal, CEO of India Sotheby’s International Realty.

Goyal further said, “The fact that people picked “a good investment opportunity, as a strong reason for buying luxury real estate points to a bullish outlook on luxury home prices. Unlike some of the developed countries, where the price increase frenzy seems to be cooling off, in India, I believe, we are at the start of a secular price rise. We expect low-rise homes in the thriving urban centers, especially in Delhi NCR and Mumbai, and the vacation home destination of Goa, to be the outperformers of 2022.”

As regards the money the HNIs are willing to shell out on another property, the maximum response was received for a luxury city apartment or villa were for the price range of Rs 10 – 25 crore with 69 per cent respondents picking this bracket.

The sweet spot of pricing for a luxury “holiday home” was between Rs 5-10 crore with as many as 71 per cent of respondents opting for this price band. About 29 per cent of the respondents were even willing to spend more than Rs 10 crore for the right vacation home.

“WORK FROM HOME” FINDINGS
The survey was completed before the onset of the third wave of Omicron surge, but it clearly showed that the hybrid work model is here to stay. Almost, 65 per cent of the respondents answered, they do not see themselves going back to the physical office, all 5 days of the week. “This is a clear indication that the desire to upgrade homes will remain a big motivator in 2022,” the survey found.

The extensive survey also revealed that 28 per cent of the HNIs had gone back to the office – full time, prior to the third wave of COVID. Almost half of the respondents though, continue to be in a “hybrid” work mode, spending anywhere between 1-4 days working from home. Also, about 15 per cent seem to have made a complete switch to “work from home” – which was negligible in India, pre-pandemic.

Real estate agents/advisors were the top choices for HNIs when it comes to the source of information for decision-making on buying real estate in India. However, information gleaned from the internet is catching up as a strong source of information for HNI’s when it comes to real estate buying decisions.

Also Read: Rising Fire Incidents & the Need for a Right Combating Tool

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