2022: Luxury real estate market clocked one of its best year
2022 in review: luxury real estate market clocked one of its best years
India’s luxury real estate market was set to witness a bullish momentum in 2022, which is in line with our findings from the “Luxury Outlook Survey” conducted at the beginning of the year. We were pleasantly surprised at the time that 67 percent HNIs in India wanted to buy a luxury property. And, if we evaluate the pace of our transactions and deals are done as 2022 draws to a close, we must say that the findings of the survey were bang on.
In fact, many wealthy Indians have bought not just one but multiple properties. For example, members of the Rahul Bajaj family have bought 5 ultra-luxury sea-view apartments in Mumbai, as recently reported in the media.
In November 2022, Aakash Educational Services founder JC Choudhary bought a bungalow in Delhi’s Greater Kailash for Rs 51 crore and three uber-luxury apartments in DLF’s The Camellias for around Rs 150 crore. As per reports, these are in addition to the previous three high-value property transactions that the Choudhary family had already done.
Similarly, DMart founder and CEO Radhakrishna Damani, who made the most expensive purchase (over Rs 1,000 crore) in India’s residential real estate market in 2021, bought another luxury property in the year 2022, worth around Rs 250 crore. . Ten million.
The list of ultra HNIs and HNIs buying luxury properties is getting stronger in the last few years. The universe of luxury and ultra-luxury homes now includes not only industrialists and Bollywood celebrities, but also cricketers, CXOs, and start-up founders.
As 2022 draws to a close, here’s our take on how luxury real estate market buying in India fared over the past twelve months
The world may be leaving behind the memories of the pandemic, but the one thing it changed was the cost of homes for all. The aspiration to live ‘big’ in 2022 and live it ‘now’ has been the biggest driver of ultra luxury real estate market. Invariably, a house has become the most desirable possession, and hence nothing but the best is acceptable.
We attribute this to a structural change in how and where people live, as well as their approach to homeownership. Health and well-being, large spaces, green outdoors, close to nature, and a sustainable footprint all matter more than ever. And this will continue for many years to come.
A significant portion of the new buyers in the luxury residential segment have been start-up founders, who have cashed out after stake sale. For them the greed for luxury real estate market is double. The purchase of a high-end property brings in both lifestyle upgradation as well as substantial savings on capital gains. Zeeshan Hayat, founder of Topper.com, and Neha Bansal’s purchase of Lenskart are among those who were in news in 2022.
Reinvesting in residential property can help them save up to 20 percent along with applicable surcharge and cess under Section 54F of the Income Tax Act, 1961. Flip the logic and the cost of the property is about 20% lower for them, which in a case of a high-value transaction, is substantial. Many corporate CXOs have also taken advantage of the steep rise in stock prices to redeem their ESOPs. Some of this money has also found its way into luxury real estate.
Affluent families and HNIs have informed investors. They have taken advantage of still-modest home prices to find some of the best deals in 2022 after a prolonged slump in Indian real estate. The luxury real estate market cycle has rapidly shifted into a bull gear, and this up-move has prompted many people to invest in second homes and holiday homes, using it to capitalize on vacations and future price increases. Considering the double benefit.
HNIs who have made sharp gains in the stock market have also strategically invested in hard assets. In an inflationary environment, as we are currently seeing, hard assets like the luxury real estate market do well.
Furthermore, our observation is that most major luxury real estate markets have seen strong rental growth over the past few years, attracting investors with deep pockets.
2022 will be remembered as the year when India overtakes the UK to become the 5th largest world economy, on its way to becoming the 3rd largest by 2027. The growing economy this year.
And the optimism can be felt all around. People buy real estate when they feel good and secure about their future. We would not be surprised if residential sales in the top seven cities exceed the previous records of 2013. As the wealth of a nation increases, it is bound to bring in a new set of buyers into luxury real estate and that is what we are witnessing.
I see this momentum of demand for the luxury real estate market continuing well into 2023. With this optimism, we wish you all a very happy and prosperous New Year.