Despite an almost 40 per cent jump in property prices over the past 24 months and an increase in mortgage rates, a majority of Indians (71 per cent of respondents) expressed an intent to buy real estate in the next 12-24 months, showcasing significant confidence in the market, according to a survey report by India Sotheby’s International Realty.
The annual Luxury Outlook Survey 2024, conducted by India Sotheby’s International Realty (ISIR), unveiled a robust economic optimism among high-net-worth individuals (HNIs) and ultra high-networth individuals (UHNIs), with a staggering 79 per cent expressing confidence in the Indian economy’s positive trajectory for 2023-24, compared to 59 per cent last year.
“This optimistic outlook extends to the real estate sector. Despite an almost ~40% rise in property prices over the last 24 months and increase in mortgage rates, 71% of respondents expressed an intent to buy real estate in the next 12-24 months, showcasing significant confidence in the market,” it said.
Capital appreciation has overtaken lifestyle upgrades, as the primary motivation for real estate investment (44 per cent), signaling a return of investors to the market, with a focus on long-term appreciation, the report said.
Amit Goyal, managing director of India Sotheby’s International Realty, said, “India is shaping its destiny far more confidently than ever before. The world’s fifth-largest economy is poised to become the third-largest by 2027, according to the International Monetary Fund. The country’s central bank, RBI, pegs a GDP growth guidance of 7 per cent in 2024.”
He added that the rising economic momentum is reflected in record-breaking housing sales numbers in Indian real estate in 2023 and an all-time high stock market.
“We believe the top end of the real estate market will benefit the most in the next 12-24 months. The affluent class is expected to nearly double to 100 million people within three years, according to Goldman Sachs Group Inc. India’s ultrawealthy are growing. The robust start-up ecosystems and a growing number of unicorns have added to the swelling ranks of the super-rich. 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,” said Goyal.
Ashwin Chaddha, CEO of India Sotheby’s International Realty, said there is a remarkable shift in economic sentiment, reflecting the resilience and potential of the Indian economy.
“We are not surprised that there’s been a substantial increase in the launches of new luxury projects across the top seven cities in 2023. There’s also a shift in sentiments that aligns with a broader acknowledgment of real estate’s enduring value and potential for sustained financial growth. We believe investors are strategically positioning themselves for wealth accumulation and creating multi-generational wealth through real estate investments,” he added.
As far as interest rates on home loans are concerned, 56 per cent of HNIs and UHNIs believe that the Reserve Bank of India (RBI) will start reducing interest rates in 2024, indicating a positive mortgage and financing outlook.
The survey also reflected that a staggering 83 per cent of affluent Indians own multiple luxury properties, reflecting a trend of diversified real estate portfolios among the elite.
Apart from primary residences, respondents showcased a diverse array of real estate assets, with 34 per cent owning commercial real estate, 25 per cent holiday homes, 21 per cent agricultural land, and 20 per cent farmhouses.
In other findings, 35 per cent of holiday home buyers expressed Goa as their preferred destination, highlighting the enduring appeal of Goa’s lifestyle among India’s wealthy. Desire to invest in overseas property remained stable at 12 per cent, with Dubai UAE, and USA maintaining their positions as top choices.
The report said, “43 per cent of UHNI and HNI respondents expressed a desire to consolidate their portfolios, focusing on better quality properties and rent-yielding assets. 34% of UHNIs and HNIs have shifted to digital mediums, including 3-D virtual reality and walkthroughs, to research and view properties, underscoring the impact of digital transformation even at the top of the luxury housing market.”
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