Informist, Thursday, Aug 25, 2022
By Janaki Krishnan
MUMBAI – Broadly, the real estate sector has continued to reel under the impact of COVID-19 for the past two years, but demand for premium and luxury residences has picked up pace, pushing up their prices. The rise in demand could be attributed to people increasingly looking for larger houses with better amenities and a more comfortable lifestyle.
The low interest rates, which prevailed till May this year, also allowed buyers to aspire for higher-priced real estate, said Rohan Sharma, senior director, JLL India Research.
Premium Residences Are Priced Above 15-20 Mln Rupees, Depending On Cities, While Luxury Residences Cost More Than 100 Mln Rupees.
Little surprise then that during Apr-Jun, prices of premium houses in India rose in double digits, according to data from property consultant JLL India and proptech platform SquareYards. The increase was as high as 16% for some micro-markets.
"Buyers wanted to choose projects loaded with amenities, so sales of such higher-priced projects were higher," Sharma said. "The prices for bigger-sized apartments rose as a result. In fact, a few such projects by well-known developers and in major residential corridors saw healthy price appreciation in double digits in the past year."
According to data from JLL India, sales of premium residences rose 171% year-on-year during Apr-Jun across seven major cities--Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune. Sequentially, the sales were up 3%, with the moderation being ascribed to higher interest rates.
"It's a factor of buyers looking for bigger houses and larger, more flexible configurations, with additional rooms for work from home, e-schooling for kids and a lounge space," said Sharma.
This may partly be due to demographic changes. Even as tens of millions lost jobs or were forced to take up lower-paying employment in the last two years, the number of rich Indians grew.
According to a report by Capgemini earlier this year, the number of ultra-high-net-worth individuals grew 18% year-on-year in 2021, the fastest in the Asia-Pacific region. Their wealth rose over 12% on year, the report added.
Additionally, around 70% of rich Indians expect their wealth to grow over 10% in 2022, according to a report released earlier this year by consultant Knight Frank. A significant portion of this wealth is expected to be channelled into buying property, it said.
The trend of buying larger, well-equipped homes is a distinct one that has emerged since the onset of the pandemic, said Cyrus Mody, managing partner, Viceroy Properties, a Mumbai-based developer, which sells premium and luxury residences.
Premium residences are priced above 15-20 mln rupees, depending on cities, while luxury residences cost more than 100 mln rupees.
For builders, slum redevelopment projects in cities such as Mumbai have given them more space to offer customers mid-income and premium apartments.
When it comes to ultra-high-net-worth individuals, a survey earlier this year by India Sotheby's International Realty, which deals in luxury residences, showed that they are buying for investment purposes as against the self-use trend seen before the pandemic.
According to the survey, high-net-worth individuals expect decent capital appreciation on their investments, with around three-fourths of those surveyed saying they plan to buy more residential real estate in the next two years.
The momentum remains strong, especially among buyers in the higher-income bracket who are not very price-conscious, said Mody.
A rise in interest rates would only create a short-term disruption in demand, said Sharma, adding that the momentum would sustain since interest rates are still fairly low and "...fundamentally the market is still very well-priced." End
Edited by Namrata Rao
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