Realty reality: Will luxury housing in India lose its sheen in 2024?

Luxury housing in India witnessed a record-breaking year in 2023 as the sales of such homes touched an all-time high. Now, is the demand for these costlier homes likely to continue in 2024 as well?

The Indian real estate sector witnessed a record year in 2023. The sector recorded an all-time high in annual sales during the year. But most importantly, there has been a change in the type of homes being preferred. Indians are now shifting towards more expensive properties.

A report released by a real estate consultancy in November last year showed a massive jump in the buying of "luxury" homes. It said that between January and October, the sales of such homes almost doubled to 9,200 units as compared to 4,700 units in the same period in 2022. These homes were priced at or above Rs 4 crore.

 

Later, Knight Frank released a report stating that during the July-September quarter, the sale of "luxury" homes in India crossed that of affordable homes for the first time. Here, "luxury" homes were priced above Rs 1 crore.

Data released by Anarock showed that the sales of homes priced above Rs 1.5 crore in 2023 were 6 per cent higher than that in 2022. According to estimates, the demand for top-end homes touched a decadal high in 2023.

Notably, the demand for bigger homes rose despite India being the 14th costliest market globally as of September 30, 2023, according to the Global House Price Index and elevated interest rates.

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Will sales of costlier homes continue in 2024?

Industry players and analysts Business Standard spoke to said that the demand for costlier homes in India is expected to remain robust in 2024.

Santhosh Kumar, vice chairman at Anarock Group said, "Considering the present trends in residential real estate, demand for luxury homes will continue to remain strong in 2024."

He said that in most markets like Delhi-NCR, there has been a scarcity of new supply of luxury projects by Grade A developers. This gap is now gradually being filled in by leading developers.

"The market is also well recognising the execution capabilities of developers," added Aman Sarin, director and chief executive officer at Anant Raj Limited. This is expected to raise the demand for costlier homes.

TARC has announced that it will invest around Rs 1,200 crore to develop a luxury housing project in Central Delhi. Smartworld said it would invest Rs 3,000 crore in a luxury housing project in Gurugram. DLF also announced its luxury project DLF Privana South in Gurugram, which saw sales of over Rs 7,200 crore in just three days.

Other developers also sounded optimistic about the demand for such homes. Nayan Raheja, promoter of Raheja Developers said, "The momentum gathered by luxury and super luxury homes is going to maintain its streak in the coming times."

Amit Modi, director at County Group added, "2024 will witness a repeat of this performance. Most importantly, we do not expect this demand to come down for a significant amount of time."

The main factors behind the high demand for such homes, according to analysts and developers, are changed customer preferences, pent-up demand and growth of the Indian economy.

"The luxury market is witnessing this momentum on the back of pent-up demand created during the downcycle of 2014 to 2020, the intact desire among consumers to improve their lifestyle, and the ability to fund the purchase in the wake of rise in wealth," said Vivek Rathi, national director research at Knight Frank India. 

"Combined, these factors are supported by a resilient Indian economy and thriving business environment and expected to support the growth this year."

Kumar added that after the Covid-19 pandemic, while life has returned to normalcy, the demand for bigger homes due to work-from-home and e-schooling has remained high.

Mohit Jain, managing director at Krisumi Corporation said that the prices of these homes are expected to remain largely stable this year and as the RBI may slash key interest rates, "a likely fall in mortgage rates would further boost consumers' confidence".

The demand may also continue to be high as Indian real estate is witnessing increasing interest from rich Indians living abroad. A Bloomberg report earlier this month suggested that Indians living abroad make up around 20 per cent of all home sales in the country.

While the outlook remains positive for 2024, in the longer run, the demand for such homes will depend on the intensity of new launches.

According to Rathi, the slowdown in demand is generally satiated with the enhanced supply of luxury projects in 2-3 years.

"However, any likelihood of drastic changes brought by the change in business environment, political landscape, and wealth creation are some risk factors."