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

56% of respondents of the CII-ANAROCK Consumer Survey – H2 2021 – H2 2021 expect housing prices to rise in 2022 due to Inflationary trends in construction raw materials and overall operational costs for developers. The survey, conducted between July and December 2021, polled 5,210 participants via various digital platforms across tier 1, tier 2, and tier 3 cities.

In a quantitative analysis of the likely consumer reaction to such a price rise, the survey finds that an under-10% increase would have a moderate-to-low impact. However, an increase of over 10% would have more profound repercussions on buyer sentiment.

The survey also identifies an increasing demand for newly launched properties in cities like MMR and Bengaluru. Though ready-to-move-in (RTM) homes are still the most preferred category for 32% of respondents, this denotes a 14% reduction for this preference since the first Covid-19 wave.

Over 31% of buyers in MMR and Bengaluru have a positive outlook on newly launched projects, possibly indicating a return of investors in these markets. Another major factor influencing this change is that post-Covid-19, the new housing supply is dominated by branded developers, which homebuyers perceive as safe.

Anuj Puri, Conference Chairman – 4th CII Real Estate Confluence & Chairman – ANAROCK Group, says, “Votes favouring real estate as an asset class rose by 3% in this survey – from 54% in the H1 2021 edition to 57% in H2 2021. This is especially significant since housing prices are likely to rise by 5-8% in 2022 due to increased input cost pressure and supply chain issues. Hardening interest rates, which are very likely in the second half of 2022, will be another factor driving up the overall acquisition cost for homebuyers. 56% of respondent homebuyers are aware of this.”

“Nevertheless, the new pandemic-induced desire for homeownership continues to be robust,” says Puri. “At least 63% of previously fence-sitting respondents are now determined to become homeowners. For another 30%, the pandemic has not impacted their buying decisions, effectively resulting in 93% of respondents now convinced homebuyers.”

The survey also studies the property types in highest demand across cities, from preferred property sizes, hottest-selling budget ranges – and residential plots.

Residential plots are the second-most preferred property type in the top 7 cities – and the most preferred option in tier 2 and tier 3 cities and towns. Apartments are still the property type of choice for urban buyers. Only 17% of surveyed urban buyers will pick a plotted development over other property types, but a significant 51% of respondents from tier 2 & tier 3 cities favour plotted developments. 21% of respondents in Chennai, 18% in Bengaluru, and 16% in Kolkata will buy plotted developments.

Extra living space continues to be a major ask amid ongoing and resilient WFH and e-schooling realities. 28% of respondents will buy homes with that extra half BHK – of which 72% had not considered this extra space essential before the Covid-19 pandemic.

Approx. 43% of respondents will buy homes in the city peripheries – just 22% now prefer to live within city limits, close to office hubs. The future of work is tilting towards the hybrid model, and proximity to offices is no longer a significant concern.

In terms of budget preferences, approx. 63% prefer homes in the mid and premium segments priced within INR 45 lakh – INR 1.5 Cr. The demand for affordable housing has dropped further – from 40% votes in the survey’s H2 2020 edition to 27% in H1 2021 and 25% in H2 2021.

As always, the survey also provides updated insights on its respondents’ investment timelines, horizons, and age brackets. In short, the CII-ANAROCK Consumer Survey – H2 2021 unwraps the latest housing demand trends and shows what developers must focus on to harness this demand.

• Price rise of <10% will have a moderate-to-low impact on sales; price rise of >10% would have a high impact
• Newly launched properties gaining traction in MMR & Bengaluru with over 31% respondent buyers favouring this category
• Residential plots are the 2nd best property type in the top 7 cities, most preferred option in tier 2 & 3 cities
• Demand for extra 1/2 BHK increases post-pandemic; 28% respondents prefer this option amid WFH & e-schooling compulsions
• 43% of respondents will buy homes in city peripheries; 63% prefer mid & premium segment options priced INR 45 lakh – INR 1.5 Cr

Also Read: In 30 days of 2022 Mumbai sees 7718 home sales

The post Many Homebuyers Expect Housing Prices Hike in 2022 appeared first on Square Feat India.