As luxury housing sales pick up, prices also spike
The rise in house prices and the higher costs of loans may have dented appetite for low and mid-income segments but luxury house sales are booming and that is where developers are concentrating.
The demand for premium and luxury homes has also resulted in a jump in prices, about a fourth in the last five years with most of the increase having taken place in the last couple of years. Premium houses are priced above ₹ four crore.
Data from property consulting firm CBRE South Asia shows that luxury housing sales rose by 130 per cent in the first half of calendar 2023, with some cities such as Hyderabad seeing a 14-fold rise in sales and in Delhi-National Capital Region rising 3-fold. The data is for the top seven cities, regions of India – Mumbai, Delhi-NCR, Pune, Bengaluru, Kolkata, Hyderabad, and Chennai.
Total sales of luxury sales in the period January to June was 6,900 units, Delhi-NCR, Mumbai, and Hyderabad accounting for 90 per cent of it. Both the March and June quarters have seen robust sales with the pace picking up in the second quarter.
A few years back there had been tepid demand for luxury and premium houses and across cities, developers were struggling to get the stock off their books, especially those in the super luxury category
Cyrus Mody, founder, and CEO of Viceroy Properties said that one of the reasons for the poor demand for luxury housing then was the mismatch between developers’ expectations and what buyers were prepared to pay. Location also has a lot to do with sales in the luxury segment, where buyers are more choosy. Viceroy Properties focuses on luxury housing in and around Mumbai.
However, the advent of Covid, a rise in start-up millionaires and billionaires, the need for large spacious homes with more amenities and features have led to luxury homes being all the rage. Those high net worth individuals who have made money in the stock markets are channelling the proceeds into real estate while non-resident Indians have also been investing more in the Indian real estate market.
When Covid happened and there was a resurgence in housing demand, real estate developers focused more on the mass and mid-income segments because that was where the demand was coming from. However a steady rise in mortgage rates as well as an upward trajectory in housing prices have led to demand becoming subdued in these segments. Developers have also turned their attention to the premium segment, which is not very price sensitive.
Developers such as Lodha and Prestige Estates have seen robust sales in many of the upscale projects that have been recently launched.
Anshuman Magazine, Chairman & CEO India, South-East Asia, Middle East & Africa at CBRE said that projects in the premium and luxury segments would continue to witness healthy traction with new launches and mortgage rates will have a relatively muted impact on demand from this segment.
Mody said that he expected the momentum to sustain in the upcoming festive season.
On an average house price have been rising six-seven per cent almost every quarter over the past couple of years. In the June quarter for instance, house prices rose seven per cent on year according to a report by CREDAI-Colliers-Liases Foras.
In the luxury segment, there has been a positive surge. “With increased demand for spacious dwellings, developers continue to launch high-end projects, which has pushed housing prices for under construction units northwards in markets like Kolkata, Hyderabad, Delhi NCR and Bengaluru,” said the report.
ANAROCK group chairman Anuj Puri said that in the pre-pandemic period prices in this segment had stagnated but “extremely robust sales ably supported by good supply pipeline have resulted in luxury homes witnessing the most significant price appreciation.”
He pointed out that Hyderabad was a standout in the luxury market segment with extraordinary appetite among buyers while prices had zoomed up.